Moore v. United States

P R E L I M I N A R Y P R I N T
Volume 602 U. S. Part 1
Pages 572–652
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
June 20, 2024
REBECCA A. WOMELDORF
reporter of decisions
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572 OCTOBER
TERM, 2023
Syllabus
MOORE et ux. v. UNITED STATES
certiorari
to the united states court of appeals for
the ninth circuit
No. 22–800. Argued December 5, 2023—Decided June 20, 2024
Congress generally taxes the income of American business entities in one
of two ways. Some entities, such as S corporations and partnerships,
are taxed on a pass-through basis, where the entity itself does not pay
taxes. 26 U. S. C. §§ 1361–1362. Instead, the entity's income is attrib-
uted to the shareholders or partners, who then pay taxes on that income
even if the entity has not distributed any money or property to them.
§§ 61(a)(12), 701, 1366(a)–(c). Other business entities do pay taxes di-
rectly on their income. Those entities' shareholders ordinarily are not
taxed on that income but are taxed when the entity distributes a divi-
dend or when the shareholder sells shares.
Congress treats American-controlled foreign corporations as pass-
through entities. Subpart F of the Internal Revenue Code attributes
income of those business entities to American shareholders and taxes
those shareholders on that income. §§ 951–952. Subpart F, however,
applies only to a small portion of the foreign corporation's income,
mostly passive income. In 2017, Congress passed the Tax Cuts and
Jobs Act. As relevant here, Congress imposed a one-time, backward-
looking, pass-through tax on some American shareholders of American-
controlled foreign corporations to address the trillions of dollars of
undistributed income that had been accumulated by those foreign corpo-
rations over the years. Known as the Mandatory Repatriation Tax, the
tax imposed a rate from 8 to 15.5 percent on the pro rata shares of
American shareholders. §§ 965(a)(1), (c), (d).
In this case, petitioners Charles and Kathleen Moore invested in the
American-controlled foreign corporation KisanKraf t. From 2006 to
2017, KisanKraft generated a great deal of income but did not distribute
that income to its American shareholders. At the end of the 2017 tax
year, application of the new MRT resulted in a tax bill of $14,729 on the
Moores' pro rata share of KisanKraft's accumulated income from 2006
to 2017. The Moores paid the tax and then sued for a refund, claiming,
among other things, that the MRT violated the Direct Tax Clause of the
Constitution because, in their view, the MRT was an unapportioned di-
rect tax on their shares of KisanKraft stock. The District Court dis-
missed the suit, and the Ninth Circuit affrmed.
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573
Syllabus
Held: The MRT—which attributes the realized and undistributed income
of
an American-controlled foreign corporation to the entity's American
shareholders, and then taxes the American shareholders on their por-
tions of that income—does not exceed Congress's constitutional author-
ity. Pp. 581–600.
(a) Article I of the Constitution affords Congress broad power to lay
and collect taxes. That power includes direct taxes—those imposed on
persons or property—and indirect taxes—those imposed on activities
or transactions. Direct taxes must be apportioned among the States
according to each State's population, while indirect taxes are permitted
without apportionment but must “be uniform throughout the United
States,” § 8, cl. 1. Taxes on income are indirect taxes, and the Six-
teenth Amendment confrms that taxes on income need not be appor-
tioned. Pp. 581–584.
(b) The Government argues that the MRT is a tax on income and
therefore need not be apportioned. The Moores contend that the MRT
is a tax on property and that the tax is therefore unconstitutional be-
cause it is not apportioned. Income, the Moores argue, requires realiza-
tion, and the MRT does not tax any income that they have realized.
But the MRT does tax realized income—namely, the income realized
by KisanKraft, which the MRT attributes to the shareholders. This
Court's longstanding precedents, refected in and reinforced by Con-
gress's longstanding practice, confrms that Congress may attribute an
entity's realized and undistributed income to the entity's shareholders
or partners and then tax the shareholders or partners on their portions
of that income. Pp. 584–592.
(1) The Court's longstanding precedents plainly establish that,
when dealing with an entity's undistributed income, Congress may
either tax the entity or tax its shareholders or partners. Whichever
method Congress chooses, this Court has held that the tax remains a
tax on income. In Burk-Waggoner Oil Assn. v. Hopkins, 269 U. S. 110,
the Court held that the status of a business entity under state law could
not limit Congress's power to tax a partnership's income as it chose,
taxing either the partnership or the partners. Id., at 114. The Court
reiterated that principle in Burnet v. Leininger, 285 U. S. 136. Then,
in Heiner v. Mellon, 304 U. S. 271, the Court reaffrmed that Congress
may choose to tax either the partnership or the partners on the partner-
ship's undistributed income, even where state law did not allow the part-
ners to personally receive the income. The principle articulated in
Heiner also applies to corporations and their shareholders. Helvering
v. National Grocery Co., 304 U. S. 282. This line of precedents remains
good law and establishes the clear principle that Congress can attribute
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574 MOORE
v. UNITED STATES
Syllabus
the undistributed income of an entity to the entity's shareholders or
par
tners and tax the shareholders or partners on their pro rata share
of the entity's undistributed income. Notably, the principle has repeat-
edly been invoked by the lower courts in upholding subpart F.
The Moores' reliance on Eisner v. Macomber, 252 U. S. 189, which
predates the Heiner and Helvering line of cases, is misplaced. There
the question was whether a distribution of additional stock to all exist-
ing shareholders was taxable income. The Court said no, that income
requires realization and that there was no change in the value of the
shareholders' total stock holdings in the corporation before and after
the stock distribution. The Court said separately in dicta that “what
is called the stockholder's share in the accumulated profts of the com-
pany is capital, not income.” 252 U. S., at 219. The Moores' interpret
that language to mean that a tax attributing an entity's undistributed
income to its shareholders or partners is not an income tax. The clear
and defnitive holdings in Burk-Waggoner Oil, Heiner, and Helver-
ing render the Moores' reading of Eisner implausible. Those cases
squarely addressed attribution and allowed it, whereas Eisner did not
address attribution. Pp. 585–590.
(2) Congress's longstanding practice of taxing the shareholders or
partners of a business entity on the entity's undistributed income re-
fects and reinforces the Court's precedents. For example, Congress
passed an 1864 income-tax law that taxed shareholders or partners on
“the gains and profts of all companies.” 13 Stat. 282. In 1913, Con-
gress enacted a new income tax that, among other things, taxed part-
ners on their “share of the profts of a partnership.” 38 Stat. 169. As
new business entities arose, Congress employed a similar approach to S
corporations, 26 U. S. C. §§ 1361–1362; American shareholders of foreign
business entities, 50 Stat. 822; and American shareholders of American-
controlled foreign corporations, 26 U. S. C. §§ 951, 952, 957. Pp. 590–592.
(c) The Moores attempt to distinguish the MRT from those taxes long
imposed by Congress and long upheld by this Court and argue that only
the MRT is unconstitutional. Their ad hoc distinctions do not under-
mine the clear rule established by this Court's precedents. First, the
Moores argue that taxes on partnerships are distinguishable from the
MRT and not controlled by precedent because partnerships are not sep-
arate entities from their partners. But that assertion is incorrect.
When the Sixteenth Amendment was ratifed, the courts, Congress, and
state legislatures treated partnerships as separate entities in many con-
texts, and numerous States imposed taxes directly on partnerships for
partnership income. The federal and state treatment of partnerships
as separate legal entities for tax purposes contravenes the Moores' the-
ory. Second, the Moores argue that taxes on S corporations are distin-

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575
Syllabus
guishable from the MRT because shareholders of S corporations choose
to
be taxed directly on corporation income. But consent cannot explain
Congress's authority to tax the shareholders of S corporations directly
on corporate income. Rather, S corporations are another example of
Congress's authority to either tax the corporation itself on corporate
income or attribute the undistributed income to the shareholders and
tax the shareholders. Third, the Moores try to distinguish Congress's
long history of taxing shareholders of closely held foreign corporations—
including through subpart F—on the ground that those laws apply “the
doctrine of constructive realization.” That term seems to be a one-off
label created by the Moores to allow them to sidestep any existing tax
that does not comport with their proposed constitutional rule. In any
event, the Moores' constructive-realization theory does not distinguish
the MRT from subpart F and other pass-through taxes. For example,
the Moores claim that constructive realization turns on a suffcient de-
gree of control over the entity. But the level of shareholder control
with the MRT (at least 10 percent) is the same as under the longstanding
subpart F tax. And if, as the Moores concede, subpart F is not uncon-
stitutional under the “constructive realization” theory, then the MRT is
likewise not unconstitutional on that theory. Pp. 592–597.
(d) The Court's holding is narrow and limited to entities treated as
pass-throughs. Nothing in this opinion should be read to authorize any
hypothetical congressional effort to tax both an entity and its sharehold-
ers or partners on the same undistributed income realized by the entity.
Nor does this decision attempt to resolve the parties' disagreement over
whether realization is a constitutional requirement for an income tax.
Pp. 598–600.
36 F. 4th 930, affrmed.
Kavanaugh, J., delivered the opinion of the Court, in which Rob-
erts, C. J., and Sotomayor, Kagan, and Jackson, JJ., joined. Jackson,
J., fled a concurring opinion, post, p. 600. Barrett, J., fled an opinion
concurring in the judgment, in which Alito, J., joined, post, p. 604.
Thomas, J., fled a dissenting opinion, in which Gorsuch, J., joined, post,
p. 620.
Andrew M. Grossman argued the cause for petitioners.
With him on the briefs were David B. Rivkin, Jr., Jeffrey H.
Paravano, Kristin Shapiro, Dan Greenberg, Sam Kazman,
and Devin Watkins.
So l i ci t o r Gene ral Prel ogar arg ued the cause for the
United States. With her on the brief were Deputy Assist-

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576 MOORE
v. UNITED STATES
Counsel
ant Attorney General Hubbert, Deputy Solicitor General
Ganno
n, Ephraim A. McDowell, Francesca Ugolini, Mi-
chael J. Haungs, and Douglas C. Rennie.*
*Briefs of amici curiae urging reversal were fled for the State of West
Virginia et al. by Patrick Morrisey, Attorney General of West Virginia,
Lindsay S. See, Solicitor General, Michael R. Williams, Principal Deputy
Solicitor General, and Grant A. Newman, Assistant Solicitor General, and
by the Attorneys General and other offcials for their respective States as
follows: Steve Marshall of Alabama, Tim Griffn of Arkansas, Chris Carr
of Georgia, Raúl Labrador of Idaho, Todd Rokita of Indiana, Brenna Bird
of Iowa, Daniel Cameron of Kentucky, Jeff Landry of Louisiana, Lynn
Fitch of Mississippi, Austin Knudsen of Montana, Drew Wrigley of North
Dakota, Dave Yost of Ohio, Gentner Drummond of Oklahoma, Alan Wil-
son of South Carolina, Angela Colmenero, Provisional Attorney General
of Texas, and Jason Miyares of Virginia; for Americans for Tax Reform
by Steven A. Engel and Michael H. McGinley; for the Atlantic Legal
Foundation by Lawrence S. Ebner; for The Buckeye Institute et al. by
Larry J. Obhof, Jr., Robert Alt, David C. Tryon, and Elizabeth Gaudio
Milito; for the Cato Institute by Anastasia P. Boden and Thomas A.
Berry; for the Chamber of Commerce of the United States of America by
Gordon D. Todd, Joshua J. Fougere, Jonathan D. Urick, and Tyler S.
Badgley; for Former Attorney General Edwin Meese III et al. by Philip
Williamson; for FreedomWorks Inc. by Richard A. Epstein and John Yoo;
for the Independent Women's Law Center by Kathryn E. Tarbert and
Gene C. Schaerr; for Individual Taxpayers by Linda Coberly; for the Land-
mark Legal Foundation by Matthew C. Forys, Michael J. O'Neill, and
Richard P. Hutchison; for the Liberty Justice Center by Jacob Huebert;
for the Manhattan Institute for Policy Research et al. by Michael B. Kim-
berly and Ilya Shapiro; for the National Taxpayers Union Foundation by
Joseph D. Henchman and Tyler Martinez; for the Pacifc Research Insti-
tute by Erik S. Jaffe; for the Philanthropy Roundtable by Ilya Shapiro
and Trevor Burrus; for Saving America's Family Enterprises et al. by
Neal Kumar Katyal and Michael J. West; for Sixteenth Amendment In-
sights, LLC, et al. by William E. Jacobs; for the Southeastern Legal Foun-
dation et al. by Thomas R. McCarthy, J. Michael Connolly, Kimberly S.
Hermann, and Braden H. Boucek; for the Southern Policy Law Institute
by Theodore M. Cooperstein; for Hank Adler by Madison S. Spach, Jr.;
and for Mark E. Berg by William A. Harvey.
Briefs of amici curiae urging affrmance were fled for the State of
Arizona et al. by Kristin K. Mayes, Attorney General of Arizona, Daniel
C. Barr, Chief Deputy Attorney General, Joshua D. Bendor, Solicitor Gen-

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as: 602 U. S. 572 (2024)
577
Opinion of the Court
Justice Kavanaugh delivered the opinion of the Court.
F
or tax purposes, Congress has long treated some corpora-
tions and partnerships as pass-throughs: Congress does not
tax the entity on its income, but instead attributes the undis-
tributed income of the entity to the shareholders or partners
and then taxes the shareholders or partners on that income.
This Court has long upheld those taxes.
Since 1962, Congress has likewise treated American-
controlled foreign corporations as pass-throughs. That 1962
law (known as subpart F) attributes certain income, mostly
passive income, of American-controlled foreign corporations
eral, and Alexander W. Samuels, Principal Deputy Solicitor General, and
by the Attorneys General for their respective jurisdictions as follows: Rob
Bonta of California, Philip J. Weiser of Colorado, William Tong of Con-
necticut, Brian L. Schwalb of the District of Columbia, Anne E. Lopez of
Hawaii, Kwame Raoul of Illinois, Aaron M. Frey of Maine, Anthony G.
Brown of Maryland, Dana Nessel of Michigan, Keith Ellison of Minnesota,
Matthew J. Platkin of New Jersey, Letitia James of New York, Ellen F.
Rosenblum of Oregon, Michelle A. Henry of Pennsylvania, Charity R.
Clark of Vermont, and Robert W. Ferguson of Washington; for the Ameri-
can College of Tax Counsel by Richard M. Corn and Lucas Kowalczyk;
for the American Tax Policy Institute by Stephen B. Land, Philip Wag-
man, and Lawrence M. Hill; for Main Street Alliance et al. by Jeffrey B.
Dubner and Skye L. Perryman; for Professors of Tax Law et al. by Amy
Marshak; for Tax Economists by David W. T. Daniels; for the Tax Law
Center at NYU Law et al. by Jonathan E. Taylor; for Tax Professors by
Donald B. Tobin, pro se; for Bruce Ackerman et al. by Kelsi Stayart
White, Jane Langdell Robinson, and Sammy Ford IV; for Akhil Reed
Amar et al. by Vikram David Amar, pro se; for Reuven Avi-Yonah et al.
by Andrew Weiner, Caroline D. Ciraolo, and Bryan C. Skarlatos; for John
R. Brooks et al. by Elizabeth B. Wydra, Brianne J. Gorod, and Brian R.
Frazelle; for George A. Callas et al. by Amit Agarwal and Joshua D.
Odintz; for Amandeep S. Grewal, pro se; for Calvin H. Johnson, pro se;
and for Theodore P. Seto, pro se.
Briefs of amici curiae were fled for Professors of Law et al. by Elbert
Lin and Thomas B. Griffth; for the Small Business and Entrepreneurship
Council by Jonathan C. Bond, Lucas C. Townsend, and Saul Mezei; for
Stop Extraterritorial American Taxation (SEAT) et al. by Laura Snyder;
for L. E. Simmons by Lisa H. Schertler; and for Alex Zhang by Paul Koster.

578 MOORE
v. UNITED STATES
Opinion of the Court
to their American shareholders and then taxes those share-
holders
on that income.
In 2017, Congress enacted a new law that attributes more
income, including active business income, of American-
controlled foreign corporations to their American sharehold-
ers and then taxes those shareholders on that income. The
question is whether that 2017 tax (known as the Mandatory
Repatriation Tax or MRT) is constitutional under Article I,
§§ 8 and 9 and the Sixteenth Amendment. This Court's
longstanding precedents establish that the answer is yes.
I
A
In general, Congress taxes the income of American busi-
ness entities such as corporations and partnerships in one of
two ways.
First, some entities such as S corporations and partner-
ships are taxed on a pass-through basis. (S corporations are
corporations with 100 or fewer shareholders where the
shareholders have elected to be taxed on a pass-through
basis. 26 U. S. C. §§ 1361–1362.) Instead of the entity itself
paying taxes, income is attributed to the entity's owners,
such as shareholders or partners, who then pay taxes on the
income of the entity even if the entity has not distributed
any money or property to them. §§ 61(a)(12), 701, 1366(a)–(c).
Second, other entities are taxed directly on their income.
For example, some corporations fle a return and pay taxes
each year just like individual taxpayers. § 11(a). When a
corporation pays taxes on its income, its shareholders are
ordinarily not taxed on that income. Instead, the sharehold-
ers typically pay taxes either when the corporation distrib-
utes money, stock, or other property to them as a dividend
or when the shareholders sell their shares and have capital
gains. §§ 61(a)(7), 1001. But the shareholders are not
taxed on the corporate income itself.
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579
Opinion of the Court
Congress has devised more nuanced rules for foreign enti-
ties
such as foreign corporations. For legal and practical
reasons, Congress generally does not directly tax foreign
corporations, including American-controlled foreign corpora-
tions, on the income that they earn outside of the United
States. Instead, Congress has imposed some taxes on in-
come of those corporations on a pass-through basis.
Most notably, starting in 1962, in what is known as sub-
part F of the Internal Revenue Code, Congress has treated
American-controlled foreign corporations as pass-through
entities: Subpart F attributes income of the corporation to
American shareholders, and taxes those American share-
holders on that income. 26 U. S. C. §§ 951–952. But sub-
part F applies only to a small portion of the foreign corpora-
tion's income, mostly passive income.
In 2017, Congress passed and President Trump signed the
Tax Cuts and Jobs Act. 131 Stat. 2054. In a variety of
ways not relevant to this case, the Act altered the United
States' approach to international corporate taxation. The
primary goal was to encourage Americans who controlled
foreign corporations to invest earnings from their foreign in-
vestments back in the United States instead of abroad.
As relevant here, one piece of that intricate and multi-
faceted 2017 Act imposed a new, one-time pass-through tax
on some American shareholders of American-controlled for-
eign corporations. That one-time tax addressed one of the
problems that had arisen under the old system: For decades
before the 2017 Act, American-controlled foreign corpora-
tions had earned and accumulated trillions of dollars in in-
come abroad that went almost entirely untaxed by the
United States. The foreign corporations themselves were
not taxed on their income. And other than subpart F, which
applies mostly to passive income, the undistributed income
of those foreign corporations was not attributed to American
shareholders for the shareholders to be taxed.
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580 MOORE
v. UNITED STATES
Opinion of the Court
As part of the complicated transition to a more territorial
system,
the 2017 Act imposed a one-time, backward-looking
tax on that accumulated income. That backward-looking
tax is known as the Mandatory Repatriation Tax or MRT.
§ 965. Similar in structure to subpart F, the MRT attrib-
uted the long-accumulated and undistr ibuted income of
American-controlled foreign corporations to American share-
holders, and then taxed those American shareholders on
their pro rata shares of that long-accumulated income at a
rate from 8 to 15.5 percent. §§ 965(a), (c), (d).
1
B
In 2006, Charles and Kathleen Moore invested $40,000 in
an American-controlled foreign corporation that one of their
friends had started in India. In return, the Moores received
a 13-percent ownership share. The company, KisanKraft,
generated a great deal of income. But as of 2017, Kisan-
Kraf t had not distr ibuted that i ncome to its Amer ican
shareholders, including the Moores, meaning that neither
KisanKraft nor the Moores had paid U. S. taxes on that
income.
The MRT applied to the Moores because of their invest-
ment in KisanKraft. By the end of the 2017 tax year, the
Moores' pro rata share of KisanKraft's accumulated income
from 2006 to 2017 totaled about $508,000. After factoring
in a deduction that is not relevant here, the Moores declared
$132,512 in income under the MRT based on their KisanKraft
shares. They owed $14,729 in taxes on that income.
The Moores paid that amount, then sued for a refund.
They claimed that the MRT was unconstitutional for two rea-
sons. First, they argued that the MRT violated the Direct
Tax Clause of the Constitution because, in their view, the
MRT was an unapportioned direct tax on their shares of
1
The Ac t a lso i mposed a si mi lar pass-through t ax goi ng for ward.
§ 951A. That tax applies to what is referred to as “global intangible low-
taxed income.” § 951A(a). That tax is not at issue in this case.
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581
Opinion of the Court
KisanKraft stock. Second, they contended that the MRT
v
iolated the Due Process Clause of the Fifth Amendment
because it applied retroactively to past income.
The District Court dismissed the suit, and the U. S. Court
of Appeals for the Ninth Circuit affrmed. The Court of Ap-
peals held that the MRT constitutes a tax on income within
the meaning of the Constitution because “KisanKraft earned
signifcant income, and the MRT assigns only a pro-rata
share of that income to the Moores.” 36 F. 4th 930, 936–937
(2022). The Court of Appeals also rejected the Moores' due
process claim regarding retroactivity. Id., at 938–939.
The Moores sought review in this Court, raising only their
Direct Tax Clause argument. This Court granted certio-
rari. 599 U. S. 918 (2023).
II
We must decide whether the 2017 Mandatory Repatriation
Tax, or MRT, exceeds Congress's constitutional authority.
To analyze that question, we begin with a brief review of
Congress's taxing power under the Constitution.
After Independence in 1776 and under the Articles of Con-
federation in effect from 1781 to 1789, the Federal Govern-
ment relied primarily on contributions from the States for
revenue. The Federal Government's expenses and needs
sometimes far outpaced the contributions that the States
were willing to provide. As George Washington famously
recognized during the Revolutionary War, reliance on the
States to fund the National Government hampered impor-
tant national priorities—including the war against the Brit-
ish. 12 Papers of George Washington: Revolutionary War
Series 683–687 (P. Chase & F. Grizzard eds. 2002) (letter
from Valley Forge).
The National Government's continuing revenue problems
under the Articles of Confederation helped prompt the Con-
stitutional Convention that convened in Philadelphia in the
summer of 1787. The Federalist No. 30 (A. Hamilton). The
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582 MOORE
v. UNITED STATES
Opinion of the Court
Framers responded to the revenue problem by granting Con-
gress
an expansive taxing power.
Article I of the Constitution affords Congress broad
“Power To lay and collect Taxes, Duties, Imposts and Ex-
cises.” Art. I, § 8, cl. 1. That power includes “ `two great
classes of ' ” taxes—direct taxes and indirect taxes. Bru-
shaber v. Union Pacifc R. Co., 240 U. S. 1, 13 (1916).
Generally speaking, direct taxes are those taxes imposed
on persons or property. See National Federation of Inde-
pendent Business v. Sebelius, 567 U. S. 519, 570–571 (2012).
As a practical matter, however, Congress has rarely enacted
direct taxes because the Constitution requires that direct
taxes be apportioned among the States. To be apportioned,
direct taxes must be imposed “in Proportion to the Census
of Enumeration.” U. S. Const., Art. I, § 9, cl. 4; see also § 2,
cl. 3. In other words, direct taxes must be apportioned
among the States according to each State's population.
So if Congress imposed a property tax on every American
homeowner, the citizens of a State with fve percent of the
population would pay fve percent of the total property tax,
even if the value of their combined property added up to only
three percent of the total value of homes in the United
States. To pay fve percent, the tax rate on the citizens of
that State would need to be substantially higher than the
tax rate in a neighboring State with the same population but
more valuable homes.
To state the obvious, that kind of complicated and politi-
cally unpalatable result has made direct taxes diffcult to
enact. Indeed, the parties have cited no apportioned direct
taxes in the current Internal Revenue Code, and it appears
that Congress has not enacted an apportioned tax since the
Civil War. See 12 Stat. 297; E. Jensen, The Taxing Power:
A Reference Guide to the United States Constitution 89
(2005).
By contrast, indirect taxes are the familiar federal taxes
imposed on activities or transactions. That category of
taxes includes duties, imposts, and excise taxes, as well as
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583
Opinion of the Court
income taxes. U. S. Const., Art. I, § 8, cl. 1; Amdt. 16.
U
nder the Constitution, indirect taxes must “be uniform
throughout the United States.” Art. I, § 8, cl. 1. A “ `tax
is uniform when it operates with the same force and effect
in every place where the subject of it is found.' ” United
States v. Ptasynski, 462 U. S. 74, 82 (1983).
Because income taxes are indirect taxes, they are permit-
ted under Article I, § 8 without apportionment. As this
Court has said, Article I, § 8's grant of taxing power “is
exhaustive,” meaning that it could “never” reasonably be
“questioned from the” Founding that it included the power
“to lay and collect income taxes.” Brushaber, 240 U. S., at
12–13. In 1861, Congress enacted the Nation's frst unap-
portioned income tax. 12 Stat. 309. The Civil War income
tax was recognized as an indirect tax “under the head of
excises, duties and imposts.” Brushaber, 240 U. S., at 15;
see also Springer v. United States, 102 U. S. 586, 598, 602
(1881).
In 1895, however, in Pollock v. Farmers' Loan & Trust
Co., this Court held that a tax on income from property
equated to a tax on the property itself, and thus was a direct
tax that had to be apportioned among the States. 158 U. S.
601, 627–628. The Pollock decision sparked signifcant con-
fusion and controversy throughout the United States.
Congress and the States responded to Pollock by approv-
ing a new constitutional amendment. Ratifed in 1913, the
Sixteenth Amendment rejected Pollock's confation of (i) in-
come from proper ty and ( i i) the proper ty itself. The
Amendment provides: “The Congress shall have power to
lay and collect taxes on incomes, from whatever source de-
rived, without apportionment among the several States, and
without regard to any census or enumeration.” U. S. Const.,
Amdt. 16 (emphasis added).
Therefore, the Sixteenth Amendment expressly confrmed
what had been the understanding of the Constitution before
Pollock: Taxes on income—including taxes on income from
property—are indirect taxes that need not be apportioned.
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584 MOORE
v. UNITED STATES
Opinion of the Court
Brushaber, 240 U. S., at 15, 18. Meanwhile, property taxes
remai
n direct taxes that must be apportioned. See Helve-
ring v. Independent Life Ins. Co., 292 U. S. 371, 378–379 (1934).
III
With that background, we turn to the 2017 Mandatory Re-
patriation Tax. The MRT is not apportioned among the
States. The Government argues that the MRT is a tax on
income and therefore need not be apportioned. The Moores
contend that the MRT is a tax on property, rather than a
tax on income, and that the tax is therefore unconstitutional
because it is not apportioned.
What distinguishes income from property? The Moores
argue that income requires realization. The Moores say
that realization occurs when gains come into the taxpayer's
coffers—for example, through wages, sales, or dividends, as
distinct from appreciation in the value of a home, stock in-
vestment, or other property. And the Moores contend that
the MRT does not tax any income that they have realized.
Critically, however, the MRT does tax realized income—
namely, income realized by the corporation, KisanKraft.
The MRT attributes the income of the corporation to the
shareholders, and then taxes the shareholders (including the
Moores) on their share of that undistributed corporate
income.
So the precise and narrow question that the Court ad-
dresses today is whether Congress may attribute an entity's
realized and undistributed income to the entity's sharehold-
ers or partners, and then tax the shareholders or partners
on their portions of that income. This Court's longstanding
precedents, refected in and reinforced by Congress's long-
standing practice, establish that the answer is yes.
2
2
As discussed below, in fra, at 598–599, our analysis today does not ad-
dress the distinct issues that would be raised by (i) an attempt by Con-
gress to tax both the entity and the shareholders or partners on the
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A
Congress
sometimes chooses to tax a business entity itself
on the income that the entity earns. Alternatively, Con-
gress sometimes elects to treat an entity as a pass-through—
attributing the entity's undistributed income to the share-
holders or partners and then taxing the shareholders or
partners on that income. Either way, this Court has held
that the tax remains a tax on income—and thus an indirect
tax that need not be apportioned.
In 1925, in Burk-Waggoner Oil Assn. v. Hopkins, the
Court articulated that fundamental principle. 269 U. S. 110.
The case involved a tax on the income of an entity that state
law treated as a partnership. Under state law, the partner-
ship's property was considered the property of the partners.
For that reason, the partnership argued that Congress had
to tax the partners on the income and could not tax the
partnership.
This Court rejected that argument. The Court stated:
“Neither the conception of unincorporated associations pre-
vailing under the local law, nor the relation under that law
of the association to its shareholders, nor their relation to
each other and to outsiders, is of legal signifcance as bearing
upon the power of Congress to determine how and at what
rate the income of the joint enterprise shall be taxed.” Id.,
at 114. In other words, Congress could tax the income as it
chose, taxing either the partnership or the partners on the
partnership's undistributed income. So the tax on the part-
nership was proper.
In 1932, in Burnet v. Leininger, the Court reiterated that
principle. 285 U. S. 136. There, the Court considered “the
validity” of a tax attributing partnership income to part-
ners. Id., at 142. The Court again held that “Congress,
having the authority to tax the net income of partnerships,
entity's undistributed income; (ii) taxes on holdings, wealth, or net worth;
or (iii) taxes on appreciation.
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could impose the liability upon the partnership directly,”
or
it could impose tax liability “upon the individuals carry-
ing on business in partnership.” Ibid. (quotation marks
omitted).
Next, in 1938 in Heiner v. Mellon, the Court again ad-
dressed a situation closely akin to the Moores' case here—a
tax on partners for the undistributed income of their part-
nership. 304 U. S. 271. In that case, the partnership
earned income, but state law did not allow the partners to
personally receive the income. Nonetheless, under the rele-
vant federal tax law, the individual partners owed taxes on
the partnership's income. The partners argued that Con-
gress could not tax them on income that they did not and
could not personally receive.
This Court upheld the tax on the partners, reasoning that
it was immaterial that the partners did not actually receive
the income earned by the partnership. The Court reaf-
frmed that Congress may choose to tax either the partner-
ship or the partners on the partnership's undistributed
income.
The principle articulated by this Court in Heiner v. Mellon
also applies to corporations and their shareholders. On the
same day in 1938 that the Court decided Heiner v. Mellon,
the Court also decided Helvering v. National Grocery Co.
In that case, the Court ruled that the controlling shareholder
of a corporation could not “prevent Congress, if it chose to
do so, from laying on him individually the tax on the year's
profts.” 304 U. S. 282, 288. Citing Heiner v. Mellon, the
Court stated that Congress may tax shareholders of the cor-
poration on the corporation's undistributed income, in much
the same way that Congress can tax the partners of a part-
nership on the partnership's undistributed income. 304
U. S., at 288–289.
So by 1938, this Court's precedents had established a clear
rule that directly contradicts the Moores' argument in this
case. That line of precedent remains good law to this day.
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Indeed, since then, it has gone without serious question in
both
Congress and the federal courts that Congress can at-
tribute the undistributed income of an entity to the entity's
shareholders or partners, and tax the shareholders or part-
ners on their pro rata share of the entity's undistributed
income.
Most notably, the courts have repeatedly invoked that
principle in upholding subpart F, which Congress enacted
in 1962. Like the MRT, subpart F treats certain foreign
corporations as pass-throughs by attributing undistributed
income of foreign corporations to their American sharehold-
ers, and then taxing the American shareholders on their
pro rata shares of the income. As the Second Circuit con-
cluded in a leading case upholding subpart F: The constitu-
tional challenge to subpart F “borders on the frivolous” in
light of Heiner v. Mellon. Garlock, Inc. v. Commissioner,
489 F. 2d 197, 202–203, and n. 5 (1973); see also Estate of
Whitlock v. Commissioner, 59 T. C. 490, 507 (1972) (The “Su-
preme Court's pronouncements have been to the effect that
taxation of undistributed current corporate income at the
stockholder level rather than at the corporate level is within
the congressional power”), aff 'd in relevant part, 494 F. 2d
1297, 1301 (CA10 1974) (adopting the Tax Court's analysis);
B. Bittker & L. Lokken, Federal Taxation of Income, Estates
and Gifts ¶1.2.4 (2024) (noting the consensus in favor of Con-
gress's power to tax foreign corporations as pass-through
businesses); cf. Eder v. Commissioner, 138 F. 2d 27, 28 (CA2
1943) (“In a variety of circumstances it has been held that
the fact that the distribution of income is prevented by oper-
ation of law, or by agreement among private parties, is no
bar to its taxability”).
In response to that dispositive line of precedents against
them, the Moores invoke the Court's earlier 1920 decision in
Eisner v. Macomber, 252 U. S. 189. The Moores argue that
some language in Eisner v. Macomber is inconsistent with
the rule subsequently established in Burk-Waggoner Oil
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Opinion of the Court
Assn. v. Hopkins, Heiner v. Mellon, and Helvering v. Na-
t
ional Grocery Co. and followed ever since by Congress and
the federal courts.
The Moores' reliance on Eisner v. Macomber with respect
to the attribution issue is misplaced. Importantly, Eisner v.
Macomber was not a case about Congress's power to attrib-
ute the income of an entity to the entity's shareholders or
partners. Rather, the Court in Eisner v. Macomber ad-
dressed a situation where a corporation created and distrib-
uted additional stock to existing shareholders. 252 U. S., at
200. The corporation distributed the additional shares of
stock in proportion to each shareholder's percentage of own-
ership. Id., at 210–211. So the actual value of the share-
holders' total stock holdings in the corporation did not
change. Ibid.
The question in Eisner v. Macomber was whether the new
stock was nonetheless taxable income for the shareholders.
Id., at 199. The Court said no. Id., at 212. The Court rea-
soned that there was no change in the value of the sharehold-
ers' total stock holdings in the corporation before and after
the stock distribution. Id., at 210–211. So the new stock
did not represent any kind of economic gain to the sharehold-
ers. Ibid. And the Court further stated that income re-
quires realization. Id., at 207, 211–212. Yet neither the
corporation nor the shareholders had realized income from
the corporation's creation and distribution of additional
stock. Id., at 210–213.
3
3
The Government argues that a gain does not need to be realized to
constitute income under the Constitution. The Government contends that
Eisner v. Macomber's discussion of realization was dicta because the stock
dividend did not represent any kind of economic gain (realized or unreal-
ized) for the shareholders. The Government further contends that Eisner
v. Macomber's discussion of realization has, in any event, been abrogated
by later decisions of this Court, such as Helvering v. Bruun, 309 U. S. 461
(1940), Helvering v. Griffths, 318 U. S. 371 (1943), and Commissioner v.
Glenshaw Glass Co., 348 U. S. 426 (1955). Because the MRT taxes real-

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Separate from that analysis, the Court went on to say in
dic
ta that “what is called the stockholder's share in the accu-
mulated profts of the company is capital, not income.” Id.,
at 219. Because the corporation had already paid taxes on
its income, that statement and the surrounding discussion
may have been designed to cast doubt on the legality of dou-
ble taxation—taxing both the corporation and its sharehold-
ers on the corporation's undistributed income. See, e. g.,
Brief for American College of Tax Counsel as Amicus Cu-
riae 16–17; Brief for Tax Law Center at NYU Law et al. as
Amici Curiae 6–7.
But the Moores interpret that language in Eisner v. Ma-
comber to mean that a tax attributing an entity's undistribu-
ted income to its shareholders or partners is not an income
tax. The Moores' reading is implausible. The Court in
Eisner v. Macomber did not purport to address attribution,
no doubt because the tax at issue there did not attribute
income of the corporation to the shareholders. And if there
were any ambiguity on that point, it was quickly eliminated
by this Court's clear and defnitive holdings in Burk-
Waggoner Oil Assn. v. Hopkins, Heiner v. Mellon, and
Helvering v. National Grocery Co. In those three cases,
unlike in Eisner v. Macomber, the Court squarely addressed
attribution—and allowed it. None of those cases so much
as mentioned Eisner v. Macomber, which is not surprising
because, to reiterate, Eisner v. Macomber did not address
attribution. So whatever else Eisner v. Macomber might
stand for, it does not proscribe attribution and thus has no
bearing on the attribution issue in this case.
To sum up: The Court's longstanding precedents plainly
establish that, when dealing with an entity's undistributed
ized income—namely, income realized by the corporation and attributed
to the shareholders—we do not address the Government's argument that
a gain need not be realized to constitute income under the Constitution.
See also in fra, at 598–599.
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income, Congress may tax either (i) the entity or (ii) its
shareholders
or partners.
4
B
Consistent with this Court's case law, Congress has long
taxed the shareholders and partners of business entities on
the entities' undistributed income. That longstanding con-
gressional practice refects and reinforces this Court's prece-
dents upholding those kinds of taxes.
In 1864, for example, Congress passed and President Lin-
coln signed an income-tax law that taxed individuals on “the
gains and profts of all companies, whether incorporated or
partnership,” in which they were shareholders or partners.
13 Stat. 282. In 1871, the Court upheld the constitutionality
of that tax. Collector v. Hubbard, 12 Wall. 1, 18.
5
In 1913, soon after the Sixteenth Amendment was ratifed,
Congress enacted a new income tax on shareholders for their
share of the incomes of corporations formed or used to evade
taxes. 38 Stat. 166. That 1913 law also taxed partners on
each partner's “share of the profts of a partnership.” Id.,
at 169. As explained above, the Court upheld that approach
to partnership taxation in Burnet v. Leininger, 285 U. S., at
142, and Heiner v. Mellon, 304 U. S., at 280. Ever since that
1913 law and those cases, the basic partnership-tax rule has
been settled: It “is axiomatic that each partner must pay
taxes on his distributive share of the partnership's income
4
The Government acknowledges that there are due process limits on
attribution to ensure that the attribution is not arbitrary—for example,
limits based on the taxpayer's relationship to the underlying income. Tr.
of Oral Arg. 66–67, 96–97; see also Burnet v. Wells, 289 U. S. 670, 678–679
(1933). In this Court, the Moores have not raised a due process issue
regarding the attribution of KisanKraft's income to them.
5
This Court's 1895 decision in Pollock v. Farmers' Loan & Trust Co.,
158 U. S. 601, later proscribed unapportioned federal taxation of income
from property, and therefore overruled that holding of Hubbard. See
supra, at 583. But in 1913, the Sixteenth Amendment then overruled
that aspect of Pollock.
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without regard to whether that amount is actually distrib-
uted
to him.” United States v. Basye, 410 U. S. 441, 453
(1973).
As new kinds of corporate entities arose, Congress em-
ployed a similar approach. For example, in the 1918 Reve-
nue Act, Congress decided to tax shareholders of personal
service corporations—that is, shareholders of closely held
corporations that earn most of their income from the work
of their principal owners and shareholders—“in the same
manner as the members of partnerships.” 40 Stat. 1070.
And since 1958, the Internal Revenue Code has also taxed
the shareholders of S corporations in the same way as part-
nerships—by taxing the shareholders on their share of the
undistributed income of the corporation. See Bufferd v.
Commissioner, 506 U. S. 523, 524–525 (1993). S corpora-
tions are corporations with 100 or fewer shareholders where
the shareholders have elected to be taxed directly on the
corporate income. 26 U. S. C. §§ 1361–1362. A majority of
the corporations in the United States are S corporations, so
the taxation of individual shareholders of S corporations is
widespread.
In addition, Congress has long taxed major American
shareholders of foreign business entities on some of the in-
come of those entities. For example, in 1937, Congress
taxed American shareholders of foreign personal holding
companies on those companies' undistributed income. 50
Stat. 822.
And in 1962, Congress enacted subpart F, which remains
in place to this day. 76 Stat. 1006, 26 U. S. C. § 951 et seq.
To reiterate, subpart F taxes American shareholders of
American-controlled foreign corporations on several kinds of
undistributed corporate income, mostly passive income.
§§ 951, 952, 957. And as noted above, in light of this Court's
precedents, the Courts of Appeals have uniformly rejected
constitutional challenges to subpart F. See Garlock, 489
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F. 2d, at 202–203, and n. 5 (the constitutional challenge to
subpar
t F “borders on the frivolous” in light of Heiner v.
Mellon); Estate of Whitlock, 494 F. 2d, at 1301.
In short, before and after ratifcation of the Sixteenth
Amendment, Congress has often taxed the shareholders or
partners of a business entity on the entity's undistributed
income. Such a “[l]ong settled and established practice” can
carry “great weight in” resolving constitutional questions—
and here it refects and reinforces this Court's precedents.
Chiafalo v. Washington, 591 U. S. 578, 592 (2020) (quotation
marks omitted); see also Moore v. Harper, 600 U. S. 1, 32
(2023) (The Court has “long looked to `settled and established
practice' to interpret the Constitution” (quoting The Pocket
Veto Case, 279 U. S. 655, 689 (1929))); Walz v. Tax Comm'n
of City of New York, 397 U. S. 664, 678 (1970) (An “unbroken
practice . . . is not something to be lightly cast aside”); The
Federalist No. 37, p. 229 (C. Rossiter ed. 1961) (J. Madison).
IV
The Moores are obviously aware of those longstanding
congressional practices and Supreme Court precedents, so
they had two choices of how to deal with that stark reality
in this Court. They could have argued that all of those
taxes are unconstitutional and that all of those precedents
should be overruled. Or in an effort to contain the blast ra-
dius of their legal theory, they could have tried to distinguish
the MRT from those other taxes and argue that only the
MRT is unconstitutional. They chose the latter approach.
To be specifc: The Moores explicitly concede that partner-
ship taxes, S-corporation taxes, and subpart F taxes are
income taxes that are constitutional and need not be appor-
tioned. Tr. of Oral Arg. 9, 48; Brief for Petitioners 50–51.
The Moores likewise do not ask the Court to overrule any of
the precedents that we have discussed above, which upheld
the attribution of entities' undistributed income. Id., at
49–52.
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Instead, the Moores seek to differentiate the MRT from
a
ll of those other taxes long imposed by Congress and long
upheld by this Court. The Moores have advanced an array
of ad hoc distinctions to try to explain why those longstand-
ing taxes are constitutional and why those precedents are
correct, and to simultaneously try to explain why those taxes
and precedents do not eviscerate their argument that the
MRT is unconstitutional. But the Moores' effort to thread
that needle, although inventive, is unavailing.
According to the Moores: (1) taxes on partnerships are dis-
tinguishable from the MRT and not controlled by precedent
because partnerships are not separate entities from their
partners; (2) taxes on S corporations are distinguishable
from the MRT and not controlled by precedent because
shareholders of S corporations choose to be taxed directly
on corporate income; and (3) subpart F taxes on American
shareholders' portions of undistributed foreign corporate in-
come are distinguishable from the MRT and not controlled
by precedent because those taxes apply what the Moores call
“constructive realization.”
To begin, and perhaps most importantly, the Moores' set
of ad hoc distinctions does not undermine the clear rule es-
tablished by this Court's precedents: Congress can choose
either to tax the entity on its income or to tax the entity's
shareholders or partners on their share of the entity's undis-
tributed income. Burk-Waggoner Oil Assn. v. Hopkins, 269
U. S. 110, 114 (1925).
In any event, the Moores' attempted distinctions of the
various taxes fail on their own terms.
First, the Moores contend that partners can be taxed on a
partnership's income only because, as of the time that the
Sixteenth Amendment was ratifed in 1913, partnerships
were not seen as legal entities separate from the partners.
But that asser ti on is i ncorrec t. W hen the Sixteenth
Amendment was ratifed, the courts, Congress, and state leg-
islatures treated partnerships as separate entities in many

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contexts. See, e. g., Forsyth v. Woods, 11 Wall. 484, 486
(1871)
(“The partnership is a distinct thing from the partners
themselves . . . ”); W. Cowles, The Firm as a Legal Person,
57 Centra l L. J. 343 (1903) (citi ng many additi onal
ratifcation-era cases); see also H. Black, Law of Income Tax-
ation Under Federal and State Laws 100 (1913) (The “undi-
vided earnings of a partnership. . . properly constitute in-
come of the frm but not of the individual partners”); 30 Stat.
545, 547–548 (1898) (federal bankruptcy law that treated
partnerships as separate entities); F. Burdick, Law of Part-
nership, ch. 3, § 1, pp. 85–86 (rev. 2d ed. 1906) (It “is becoming
more and more customary for legislation and judicial deci-
sions to treat a partnership as an entity”).
During the time period around ratifcation of the Sixteenth
Amendment, moreover, numerous States imposed taxes di-
rectly on partnerships for partnership income. 1 S. Rowley,
The Modern Law of Partnership § 306 (1916); 2 id., § 935, at
1295, and n. 1 (collecting 21 state laws); Black 146. And dur-
ing World War I, Congress enacted the Revenue Act of 1917,
which also imposed a tax directly on partnerships. 40 Stat.
303. The federal and state treatment of partnerships as
separate legal entities for tax purposes contravenes the
Moores' theory that pass-through taxation is inherent in the
nature of partnerships rather than a legislative choice.
In short, the Moores are incorrect to claim that partner-
sh ips were not h istor ica l ly seen as separate t axable
entities.
To be sure, courts declined to recognize partnerships as
separate entities in certain common-law contexts. 1 Rowley
§ 118; Burdick, ch. 3, § 1. But those cases simply demon-
strate that partnerships were (and are) fexible entities that
can receive fexible legal treatment. Those cases are con-
sistent with the longstanding principle recognized by this
Court that “Congress, having the authority to tax the net
income of partnerships, could impose the liability upon the
partnership directly, as it did under the Revenue Act of 1917,

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or upon the `individuals carrying on business in partner-
sh
ip.' ” Burnet v. Leininger, 285 U. S. 136, 142 (1932) (cita-
tion omitted). As with other business entities, Congress
may choose whether to tax (i) the entity or (ii) its sharehold-
ers or partners on the entity's undistributed income.
Second, the Moores seek to distinguish the taxation of S
corporations by saying that shareholders' choice to become
an S corporation necessarily means that the S corporation's
income is truly the shareholders' income. But consent can-
not explain S-corporation taxation; after all, consent to taxa-
tion as an S corporation can be revoked only if shareholders
who hold a majority of the corporation's shares agree. 26
U. S. C. § 1362(d)(1)(B). So, for example, if shareholders who
hold 49 percent of the shares no longer consent to paying
taxes on undistributed earnings, they nonetheless still must
do so. Moreover, there is no reason to think that share-
holder consent can eliminate the apportionment requirement
(which is a structural requirement of the Constitution) and
allow Congress to enact an otherwise unconstitutional tax.
In short, the Moores' consent theory does not explain Con-
gress's authority to tax the shareholders of S corporations
directly on corporate income. Rather, S corporations are
another example of Congress's authority to either tax the
corporation itself on corporate income or attribute the un-
distr ibuted i ncome to the shareholders and t ax the
shareholders.
Third, the Moores try to distinguish Congress's long his-
tory of taxing shareholders of closely held foreign corpora-
tions—including through subpart F—on the ground that
those laws apply “the doctrine of constructive realization.”
Brief for Petitioners 47.
The Moores have not pointed to any use of the phrase “con-
structive realization” in this Court's case law or the Internal
Revenue Code. Instead, the term seems to be a one-off
label woven out of whole cloth by the Moores to allow them
to sidestep any existing tax, especially subpart F, that does
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not accord with their proposed constitutional rule. See
Br
ief for American Tax Policy Institute as Amicus Curiae
28 (noting that “ `constructive realization' actually is a new,
amorphous phrase of petitioners' devising ”).
In any event, whatever its label, the Moores' constructive-
realization theory does not distinguish the MRT from sub-
part F and other pass-through taxes. For example, the
Moores claim that constructive realization turns on a suff-
cient degree of control over the entity. But the level of
shareholder control with the MRT (at least 10 percent) is the
same as under the longstanding subpart F tax. (And con-
trol provides an even less persuasive distinction for partners
and for shareholders of S corporations, who may have even
less than a 10 percent share and still have the entity's income
attributed to them.)
As part of their effort to distinguish the MRT from sub-
part F, the Moores also argue that subpart F is limited to
taxing “ `movable income' ” that may have been shifted
abroad to avoid taxes. Brief for Petitioners 45. But that
is not accurate. Subpart F also includes income from doing
business in a country under certain sanctions. § 952(a)(5).
Moreover, like subpart F, the MRT responds to concerns that
the owners of American-controlled foreign corporations keep
money offshore to defer taxation. So it is not clear why the
MRT would not also satisfy the Moores' requirement of an
anti-tax-avoidance purpose.
Therefore, even i f we were to accept the Moores'
constr uc tive-rea l i zati on nomenclature and theory, the
Moores' concession that subpart F imposes taxes on so-called
constructively realized income would necessarily mean that
the MRT likewise imposes taxes on constructively realized
income. After all, the MRT is integrated into subpart F's
framework, and it has the same essential features as subpart
F. If subpart F is not unconstitutional under the “construc-
tive realization” theory—and the Moores explicitly concede

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Opinion of the Court
that it is not, Tr. of Oral Arg. 9—then the MRT is likewise
not
unconstitutional on that theory.
In short, the Moores cannot meaningfully distinguish the
MRT from similar taxes such as taxes on partnerships, on S
corporations, and on subpart F income.
6
The upshot is that
the Moores' argument, taken to its logical conclusion, could
render vast swaths of the Internal Revenue Code unconstitu-
tional. See, e. g., 26 U. S. C. § 305(c) (deemed stock distribu-
tions); §§ 446, 448 (accrual accounting); § 701 (partnership
taxation); §§ 951–965 (subpart F); § 951A (pass-through tax
on global intangible low-taxed income); § 1256(a) (certain
futures contracts); § 1272(a) (original-issue discount instru-
ments); §§ 1361–1379 (S corporations); §§ 2501–2524 (gif t
taxes).
And those tax provisions, if suddenly eliminated, would
deprive the U. S. Government and the American people of
trillions in lost tax revenue. The logical implications of the
Moores' theory would therefore require Congress to either
drastically cut critical national programs or signifcantly in-
crease taxes on the remaining sources available to it—includ-
ing, of course, on ordinary Americans. The Constitution
does not require that fscal calamity.
7
6
The MRT applies to income that was realized and accumulated in the
past by foreign corporations, but not taxed by the United States. In the
lower courts, the Moores raised a due process retroactivity argument—
that the MRT taxes income that was earned too far in the past. The
Ninth Circuit rejected that argument based on this Court's decision in
United States v. Carlton, 512 U. S. 26, 30 (1994). And the Moores did not
seek certiorari on that issue. “We do not normally consider a separate
legal question not raised in the certiorari briefs,” and “see no reason to
make an exception here.” Kasten v. Saint-Gobain Performance Plastics
Corp., 563 U. S. 1, 17 (2011); see also this Court's Rule 14.1(a).
7
According to the Moores, because the Internal Revenue Code's “defni-
tion of `gross income' exerts the full measure of Congress's taxing power,”
a ruling against them would instantly subject all American stockholders to
taxes on corporate income. Tr. of Oral Arg. 4–5. That claim is entirely
incorrect. Congress has chosen to directly tax some corporations on their
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***
T
he MRT attr ibutes the undistr ibuted i ncome of
American-controlled foreign corporations to their American
shareholders, and then taxes the American shareholders on
that income. By doing so, the MRT operates in the same
basic way as Congress's longstanding taxation of partner-
ships, S corporations, and subpart F income. And the MRT
is consistent with the principles that this Court articulated
in upholding those kinds of taxes in cases such as Burk-
Waggoner Oil Assn. v. Hopkins, Heiner v. Mellon, and
Helvering v. National Grocery Co. The MRT therefore
falls squarely within Congress's constitutional authority to
tax.
For their part, the dissent and the opinion concurring in
the judgment focus primarily on the realization issue—
namely, whether realization is required for an income tax.
We do not decide that question today. When they reach the
attribution question that we do decide, the separate opinions
disagree with our reading of some of the Court's precedents.
We respect their views. But as we thoroughly explained
above, we read the Court's precedents differently.
That said, we emphasize that our holding today is narrow.
It is limited to: (i) taxation of the shareholders of an entity,
(ii) on the undistributed income realized by the entity,
(iii) which has been attributed to the shareholders, (iv) when
the entity itself has not been taxed on that income. In other
words, our holding applies when Congress treats the entity
as a pass-through.
8
income. See 26 U. S. C. § 11. Congress's choice to tax the entity rather
than the shareholders controls in that context, just as its contrary choice
to tax certain shareholders or partners, not the entity, on the entity's un-
distributed income controls for the MRT, partnerships, S corporations, and
subpart F.
8
The opinion concurring in the judgment reads the Court's attribution
precedents to draw a line that might call for a “different” conclusion for
“a tax on shareholders of a widely held or domestic corporation.” Post,
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599
Opinion of the Court
To be clear, as we indicated earlier, the Due Process
Clause
proscribes arbitrary attribution. See supra, at 590,
n. 4. And nothing in this opinion should be read to author-
ize any hypothetical congressional effort to tax both an en-
tity and its shareholders or partners on the same undistribu-
ted income realized by the entity. In such a scenario, the
entity would not simply be a traditional pass-through.
9
In addition, as the Government explains, other kinds of
taxes could of course raise different issues. See Tr. of Oral
Arg. 58–59, 62, 127–128. In its brief and at oral argument,
for example, the Government indicated that a hypothetical
unapportioned tax on an individual's holdings or property
(for example, on one's wealth or net worth) might be con-
sidered a tax on property, not income. See Brief for
United States 19 (distinguishing an income tax from a tax on
wealth or net worth because “an income tax targets eco-
nomic gain `between two points of time' ”); Tr. of Oral Arg.
69, 127–128.
And the Government further acknowledges that the con-
stitutionality of a hypothetical unapportioned tax on appreci-
ation may depend on, among other things, whether realiza-
tion is a constitutional requirement for an income tax. See
id., at 58–59, 62, 70, 93–95, 106–108, 126–127; see also Brief
for United States 32. The Moores argue that realization is
a constitutional requirement; the Government argues that it
is not. To decide this case, we need not resolve that dis-
agreement over realization.
Those are potential issues for another day, and we do not
address or resolve any of those issues here. As to the
Moores' case, Congress has long taxed shareholders of an
at 604 (opinion of Barrett, J.). We do not agree that the Court's prece-
dents draw such a line. Nor does our opinion today draw such a line.
9
That issue is distinct from Congress's well-established practice of tax-
ing the corporation on corporate income and then taxing shareholders
when they receive a dividend. See Hellmich v. Hellman, 276 U. S. 233,
237–238 (1928); see also United States v. Hemme, 476 U. S. 558, 572 (1986).
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600 MOORE
v. UNITED STATES
Jackson, J., concurring
entity on the entity's undistributed income, and it did the
same
with the MRT. This Court has long upheld taxes of
that kind, and we do the same today with the MRT. We
affrm the judgment of the U. S. Court of Appeals for the
Ninth Circuit.
It is so ordered.
Justice Jackson, concurring.
Our Constitution grants Congress “plenary power” over
taxation. Brushaber v. Union Pacifc R. Co., 240 U. S. 1, 13
(1916). The text supplies only two relevant conditions: Di-
rect taxes must be apportioned among the States based on
population, see Art. I, § 9; all other taxes must “be uniform
throughout the United States,” § 8. During the century
after our Nation's founding, the Court repeatedly recognized
that, in matters of tax policy, Congress's view was control-
ling. See, e. g., Pacifc Ins. Co. v. Soule, 7 Wall. 433, 443
(1869) (“Where the power of taxation, exercised by Congress,
is warranted by the Constitution . . . it is, necessarily, unlim-
ited in its nature”); Collector v. Hubbard, 12 Wall. 1, 18 (1871)
(upholding a tax on undistributed corporate earnings because
“it is as competent for Congress to tax annual gains and
profts before they are divided among the holders of the
stock as afterwards”).
Then came Pollock v. Farmers' Loan & Trust Co., 158
U. S. 601 (1895). In that case, the Court invalidated a fed-
eral income tax, holding that a tax on income derived from
property was a direct tax requiring apportionment. See id.,
at 637. Pollock provoked immediate outcry. President
Taft, later Chief Justice of this Court, said, “ `Nothing has
ever injured the prestige of the Supreme Court more. ' ”
B. Ackerman, Taxation and the Constitution, 99 Colum.
L. Rev. 1, 5 (1999). In 1913, the People's representatives
responded, using their power to overturn Pollock via consti-
tutional amendment. The Sixteenth Amendment restored
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601
Jackson, J., concurring
to Congress the power to tax “incomes, from whatever
source
derived, without apportionment.”
Against that stark backdrop, the Court wisely takes a re-
strained approach today. Petitioners allege that the Manda-
tory Repatriation Tax (MRT) exceeded Congress's power by
taxing shareholders on the undistributed income of a corpo-
ration; such a tax, petitioners argue, is really a direct tax
requiring apportionment. The majority opinion rightly re-
jects that challenge, thoroughly explaining why the MRT
falls within Congress's long-recognized, oft-exercised power
to tax shareholders on the undistributed income of a business
entity. See ante, at 598. I write separately to emphasize
that, before taking up petitioners' invitation to strike down
a lawfully enacted tax, the Court would need to be persuaded
of several additional arguments that we wisely do not reach.
I highlight two.
First, we would need to agree with petitioners that Con-
gress can tax income only if it is actually received or “real-
ized.” That alleged requirement appears nowhere in the
text of the Sixteenth Amendment. See Brief for John R.
Brooks et al. as Amici Curiae 14–21 (explaining that the
phrase “from whatever source derived” served only to over-
rule Pollock). Moreover, both before and after the Six-
teenth Amendment was adopted, the term “income” was
widely recognized as fexible enough to include both realized
and unrealized gains. See Brief for United States 14–26
(collecting sources); Brief for Professors of Tax Law et al. as
Amici Curiae 6–20 (same).
The alleged realization requirement is, instead, drawn
from a decision of this Court, Eisner v. Macomber, 252 U. S.
189 (1920). Macomber struck down a tax on stock divi-
dends, ostensibly because the taxpayer “ha[d] not realized or
received any income in the transaction.” Id., at 212. Like
Pollock, Macomber was “promptly and sharply criticised.”
Helvering v. Griffths, 318 U. S. 371, 373 (1943). Over the
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602 MOORE
v. UNITED STATES
Jackson, J., concurring
two decades that followed our pronouncement, we “limited”
Maco
mber's realization requirement “to the kind of dividend
there dealt with,” 318 U. S., at 375, while also “undermin[ing]
. . . the original theoretical bases of the decision in” other
contexts, id., at 394.
Thus, there is no constitutional requirement, from Ma-
comber or otherwise, that a taxpayer “be able to sever . . .
the gain from his original capital” in order to be taxed on it.
Helvering v. Bruun, 309 U. S. 461, 469 (1940); see also Cot-
tage Savings Assn. v. Commissioner, 499 U. S. 554, 559
(1991) (explaining that, properly understood, “the concept of
realization is `founded on administrative convenience,' ” com-
pared to the “ `cumbersome' ” process of “valuing assets on
an annual basis to determine . . . appreciat[ion]”). In the
lower courts too, Macomber's defnition of income has long
been deemed outmoded, if not overruled.
1
Any litigant
seeking to sustain her case on the basis of Macomber would
have to bring back from the dead its Court-created limit on
Congress's power.
2
Second, even if we were to hold that a uniform tax violated
the Sixteenth Amendment, we would still need to confrm
1
See, e. g., Commissioner v. Obear-Nester Glass Co., 217 F. 2d 56, 60
(CA7 1954) (“Even as to income derived from capital [Macomber] has been
limited to its specifc facts”); United States v. James, 333 F. 2d 748, 752
(CA9 1964) (“[I]nsofar as [Macomber] purported to offer a comprehensive
defnition of the term income as used in the Sixteenth Amendment, it has
been discarded”); Prescott v. Commissioner, 561 F. 2d 1287, 1293 (CA8
1977) (“[T]he Supreme Court has found it necessary to abandon [Macom-
ber's] attempt at an all-inclusive defnition of income”).
2
To be sure, Macomber is a hard decision to parse, and it might be read
to allow taxation of an asset only if the owner receives some new, in-
creased value. See Eisner v. Macomber, 252 U. S. 189, 211 (1920) (empha-
sizing that a stock dividend does not necessarily “increase the intrinsic
value of [the taxpayer's] holding ”); see also Koshland v. Helvering, 298
U. S. 441, 445–446 (1936). If that reading is correct, Macomber would not
preclude taxation of unrealized gains. See Brief for United States 33–34;
Brief for Alex Zhang as Amicus Curiae 26.
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603
Jackson, J., concurring
that the tax was a direct tax before requiring apportionment.
The
Constitution does not exhaustively defne direct taxes,
though it appears the category was originally intended to
encompass only land and head taxes. See, e. g., Hylton v.
United States, 3 Dall. 171, 175 (1796) (opinion of Chase, J.);
id., at 177 (opinion of Paterson, J.); id., at 183 (opinion of
Iredell, J.). But the Constitution does expressly exclude
certain taxes—“Duties, Imposts and Excises”—from appor-
tionment, and we have long interpreted those categories of
taxes broadly. Art. I, § 8; see also Steward Machine Co. v.
Davis, 301 U. S. 548, 581–582 (1937). Indeed, we have up-
held uniform taxes as excises, even when predicated on
something that, if taxed on its own, might require apportion-
ment or even be nontaxable. See Flint v. Stone Tracy Co.,
220 U. S. 107, 150–152, 165 (1911). In this case, the Govern-
ment argues that the MRT can be understood as an excise
tax on the privilege of doing business through a controlled
foreign corporation. See Brief for United States 46–49.
That argument, too, would need to be considered before we
could strike down a uniform tax like the MRT.
***
I have no doubt that future Congresses will pass, and fu-
ture Presidents will sign, taxes that outrage one group or
another—taxes that strike some as demanding too much, oth-
ers as asking too little. There may even be impositions that,
as a matter of policy, all can agree are wrongheaded. How-
ever, Pollock teaches us that this Court's role in such disputes
should be limited. “[T]he remedy for such abuses is to be
found at the ballot-box, and in a wholesome public opinion
which the representatives of the people will not long, if at all,
disregard, and not in the disregard by the judiciary of powers
that have been committed to another branch of the govern-
ment.” Pollock, 158 U. S., at 680 (Harlan, J., dissenting).
With that understanding, I join the Court's opinion in full.
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604 MOORE
v. UNITED STATES
Barrett, J., concurring in judgment
Justice Barrett, with whom Justice Alito joins, con-
curr
ing in the judgment.
This case comes down to two questions. Have the Moores
realized income from their KisanKraft shares? And if they
have not, may Congress attribute KisanKraft's income to
the Moores?
Our precedent already decides the frst question: Share-
holders receive income when they sell their shares or when
a corporation distributes profts back to its investors by de-
claring a dividend. Notwithstanding this precedent, the
Government asserts its power to tax without apportionment
all economic gains, including appreciation in property value.
The Court does not address this issue. Ante, at 584–585,
and n. 2. It focuses on the second instead, and, casting our
precedent as well settled, holds that Congress can attribute
KisanKraft's income to the Moores. As I explain below, I
think the issue is more complex than the Court lets on. But
whatever my disagreement with the Court's reasoning, it
bears emphasis that the Moores' case involves the Mandatory
Repatriation Tax (MRT), which is a specifc tax imposed
upon the American shareholders of a closely held foreign cor-
poration. A different tax—for example, a tax on sharehold-
ers of a widely held or domestic corporation—would present
a different case.
I
The question on which we granted review is “[w]hether the
Sixteenth Amendment authorizes Congress to tax unrealized
sums without apportionment among the states.” Pet. for
Cert. i. The answer is straightforward: No.
A
The Constitution distinguishes between taxes on income
and taxes on property. Income taxes must apply uniformly
across the country, Art. I, § 8, cl. 1, while “direct” taxes—
like property taxes—must be apportioned among the States,
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605
Barrett, J., concurring in judgment
§ 2, cl. 3; § 9, cl. 4.
1
Appor
tionment is an onerous burden,
both technically and politically, because it requires Congress
to allocate the total tax liability to each State according to
its population. There have been very few federal property
taxes in this nation's history (and none in the modern era).
By design and in fact, the apportionment rule has left prop-
erty taxation primarily to the States. See post, at 625–631
(Thomas, J., dissenting).
In Pollock v. Farmers' Loan & Trust Co., the Court held
that the apportionment rule applies not only to taxes on real
and personal property, but also to taxes on income “derived”
from that property—say, rents from leasing farmland. 158
U. S. 601, 618 (1895). The decision left Congress effectively
unable to tax most nonlabor income. The Sixteenth Amend-
ment overruled Pollock's second holding, stating that “Con-
gress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment.”
But it did not overrule Pollock's frst holding that taxes on
personal property are direct taxes. See Brushaber v.
Union Pacifc R. Co., 240 U. S. 1, 19 (1916); National Federa-
tion of Independent Business v. Sebelius, 567 U. S. 519, 571
(2012).
As the text of the Sixteenth Amendment indicates, income
is fnancial gain that “derive[s]” from property or another
source. See, e. g., United States v. Phellis, 257 U. S. 156,
168–169 (1921); Stratton's Independence, Ltd. v. Howbert,
231 U. S. 399, 415 (1913); Webster's New International Dic-
tionary 1089 (1909) (Webster's) (“income” is “[t]hat gain or
recurrent beneft (usually measured in money) which pro-
ceeds from labor, business, or property”). To capture the
distinction between property and income, we have described
1
Direct taxes also include a capitation tax, which imposes a tax on every
person “without regard to property, profession, or any other circum-
stance.” National Federation of Independent Business v. Sebelius, 567
U. S. 519, 571 (2012) (NFIB) (internal quotation marks omitted; emphasis
deleted).
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606 MOORE
v. UNITED STATES
Barrett, J., concurring in judgment
property as the “seed” and income as the “fruit that it will
y
ield.” United States v. Safety Car Heating & Lighting Co.,
297 U. S. 88, 99 (1936). Thus, a condominium is a landlord's
property, and rents are the income she receives from leasing
it. A patent is an inventor's property, and royalties are the
income she receives from licensing it. A capital fund is a
banker's property, and interest is the income she receives
from lending it.
The Sixteenth Amendment's reference to income “derived”
from any source encompasses a requirement that income, to
be taxed without apportionment, must be realized. See
post, at 641–644 (Thomas, J., dissenting). While the Gov-
ernment stresses that the Amendment did not include a “re-
alization” requirement, Brief for United States 15–16, “real-
ize” and “derive” have long referred to the same concept.
Compare Webster's 1778 (“realize” means to “convert an in-
tangible right or property into real (tangible) property”; to
“convert any kind of property (considered as fuctuating or
uncertain in value) into money”), with id., at 601 (“deriva-
tion” is the “[a]ct of receiving anything from a source, as
profts from capital”). The Court has used “realization” this
way (including in today's opinion) when discussing income
taxes on corporate shareholders. See, e. g., ante, at 584;
Cullinan v. Walker, 262 U. S. 134, 138 (1923). And we have
also used the term “realized” in cases involving a tax on ac-
cumulated corporate earnings, Ivan Allen Co. v. United
States, 422 U. S. 617, 627–629 (1975), debt discharge, United
States v. Kirby Lumber Co., 284 U. S. 1, 3 (1931), real estate
improvements, Helvering v. Bruun, 309 U. S. 461, 469 (1940),
punitive damages, Commissioner v. Glenshaw Glass Co., 348
U. S. 426, 431 (1955), and meal allowances, Commissioner v.
Kowalski, 434 U. S. 77, 83 (1977), to name a few. Many opin-
ions use “derived” and “realized” more or less interchange-
ably. See, e. g., Diedrich v. Commissioner, 457 U. S. 191, 199
(1982); Commissioner v. Jacobson, 336 U. S. 28, 39 (1949);
Helvering v. Horst, 311 U. S. 112, 118 (1940); Goodrich v. Ed-
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607
Barrett, J., concurring in judgment
wards, 255 U. S. 527, 535 (1921); Gray v. Darlington, 15 Wall.
63,
65–66 (1872); Pollock, 158 U. S., at 696 (Jackson, J.,
dissenting).
The “commonly understood meaning of the term” income
when the Sixteenth Amendment was ratifed requires that a
gain be “realized” or “derived”—e. g., through a sale or other
transaction—to be taxed without apportionment. Mer-
chants' Loan & Trust Co. v. Smietanka, 255 U. S. 509, 519–
520 (1921); see post, at 641–644 (Thomas, J., dissenting).
“Income within the meaning of the Sixteenth Amendment
. . . is income as the word is known in the common speech
of men.” Safety Car, 297 U. S., at 99. And in the years
surrounding the ratifcation of the Sixteenth Amendment, in-
come “was used in ordinary parlance to refer only to realized
gains.” Brief for Professors of Law and Linguistics as Ami-
cus Curiae 17; see id., at 18–22 (instances of the word “in-
come” between 1900 and 1912 in the Corpus of Historical
American English referred to “economic gain tied to a real-
ization event”).
Regardless of whether one uses the term “derived” or “re-
alized,” the important point is this: The Sixteenth Amend-
ment and the Direct Tax Clause distinguish between taxes
on property, which are subject to apportionment, and taxes
on income derived or realized from that property, which
are not.
B
The Moores have not realized income from their Kisan-
Kraft shares. Shares yield income when the corporation de-
clares a dividend—i. e., when the corporation distributes its
profts to shareholders. See Lynch v. Hornby, 247 U. S. 339,
344 (1918) (“Dividends are the appropriate fruit of stock
ownership [and] are commonly reckoned as income”); Gib-
bons v. Mahon, 136 U. S. 549, 557–558 (1890). But Kisan-
Kraft has never declared a dividend. Nor have the Moores
realized income by selling or otherwise disposing of their
shares. See Taft v. Bowers, 278 U. S. 470, 481–482 (1929).
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608 MOORE
v. UNITED STATES
Barrett, J., concurring in judgment
Because they have not received a dividend, proft from sell-
i
ng their shares, or any other pecuniary beneft from their
stock ownership, the Moores have not yet received a return
on their original investment in the company. In short, they
have not “derived” income from their shares because nothing
has come in.
The Government resists this conclusion. It concedes, as
it must, that a tax on the “total value of ” the shares “at a
particular point [in] time” is a “quintessential tax on prop-
erty” that must be apportioned. Tr. of Oral Arg. 127–128;
see NFIB, 567 U. S., at 571; Brushaber, 240 U. S., at 19. But
looking at property value across two points in time makes a
difference, the Government says, because then the tax tar-
gets appreciation rather than the asset's value. As the
Government sees it, Congress may tax without apportion-
ment “all economic gains” measured “ `between two points
in time.' ” Brief for United States 9, 15. And the increase
in value between Time A and Time B is “income.”
The Government is unable to cite a single decision uphold-
ing an unapportioned tax on appreciation. Tr. of Oral Arg.
89, 91–92. That is no surprise, because our precedent fore-
closes the Government's argument. We have explained that
income includes neither “a gain accruing to capital” nor “a
growth or increment of value in the investment.” Phellis,
257 U. S., at 169; see also Safety Car, 297 U. S., at 99 (income
is the “fruit that is born of capital, not the potency of fru-
ition”). And we have stressed that “economic gain is not
always taxable as income.” Bruun, 309 U. S., at 469 (em-
phasis added); see a lso Co mmissio ne r v. Ind i an apo l is
Power & Light Co., 493 U. S. 203, 214 (1990) (“[A] taxpayer
does not realize taxable income from every event that im-
proves his economic condition”). Although appreciation
looks valuable on paper, “the stockholder has received noth-
ing out of the company's assets for his separate use and bene-
ft,” and market fuctuations could “wip[e] out the entire in-
vestment” before the owner ever receives a dime of “income
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609
Barrett, J., concurring in judgment
within the meaning of the Sixteenth Amendment.” Eisner
v
. Macomber, 252 U. S. 189, 211 (1920).
If the Government were right that appreciation is income,
it is hard to make sense of our decision in Ivan Allen Co.
There, we considered a tax on accumulated earnings—i. e.,
income that the corporation retains as assets on its balance
sheet instead of distributing to its shareholders. 422 U. S.,
at 624–625. Because corporate tax rates were generally
lower than individuals' marginal tax rates, Congress was
concerned that corporations would be used to reduce their
“shareholders' overall tax liability by accumulating earnings
beyond the reasonable needs of the business.” Id., at 624.
So Congress imposed a tax on earnings that corporations
allowed to accumulate “beyond the reasonable and reason-
ably anticipated needs of the business.” Id., at 621, 624. In
upholding the tax, we took great care to explain that the tax
“is not directed at the unrealized appreciation of the liquid
assets”; “any unrealized appreciation in the value of the tax-
payer's portfolio . . . does not enter into the computation” of
the tax. Id., at 627–628. The tax took into account the
value and appreciation of the corporation's assets “only in
measuring reasonableness of accumulation of the earnings
and profts that otherwise independently exist.” Id., at 628.
In other words, asset appreciation was only relevant with
respect to how much of the corporation's income could be
taxed under the statute. More assets meant less income
reasonably could be accumulated. If asset appreciation it-
self were just as taxable as income, there would have been
no reason for the Court's painstaking efforts to explain the
scope of the tax. See id., at 627–629.
2
2
Although Ivan Allen Co. involved the interpretation of a tax statute,
our analysis sheds light on the Constitution's defnition of income because
we have long interpreted “gross income” in the Internal Revenue Code to
reach “ `the full measure of [Congress's] taxing power.' ” Commissioner
v. Kowalski, 434 U. S. 77, 82 (1977) (quoting Helvering v. Clifford, 309
U. S. 331, 334 (1940)).
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610 MOORE
v. UNITED STATES
Barrett, J., concurring in judgment
C
I
n upholdi ng the t ax, the Ni nth Circuit opi ned that
“[w]hether the taxpayer has realized income does not deter-
mine whether a tax is constitutional.” 36 F. 4th 930, 935
(2022). In its view, the “Supreme Court has made clear that
realization of income is not a constitutional requirement.”
Id., at 936. The Ninth Circuit misread our cases. Contrary
to its assertion, this Court has “never abandoned the core
requirement that income must be realized to be taxable with-
out apportionment.” 53 F. 4th 507, 508 (CA9 2022) (Buma-
tay, J., dissenting from denial of rehearing en banc). What
we have done is reject efforts to narrow what it means to
realize income.
For example, in Helvering v. Bruun—one of the cases on
which the Ninth Circuit relied—we clarifed that “the real-
ization of gain need not be in cash derived from the sale of
an asset” but can also “result [from] exchange of property,
payment of the taxpayer's indebtedness, relief from a liabil-
ity, or other proft realized from the completion of a transac-
tion.” 309 U. S., at 469. In that case, a tenant built a valu-
able building on the landlord's property. Upon termination
of the lease, the landlord regained possession of the prop-
erty—and acquired the building too. When the Internal
Revenue Service came calling, the landlord protested that he
had realized no taxable gain from the building in the year
that the lease ended. We sided with the IRS. Gain from a
contributed building is not like an “accrua[l] of value due
to extraneous and adventitious circumstances”—for example,
appreciation from a booming real estate market. Id., at 467.
Nor does realization require the ability to “sever the im-
provement begetting the gain from [the] original capital.”
Id., at 469. “If that were necessary,” we said, “no income
could arise from the exchange of property; whereas such gain
has always been recognized as realized taxable gain.” Ibid.
None of that remotely suggests, however, that realization is
not required or (relatedly) that appreciation counts as taxable
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611
Barrett, J., concurring in judgment
income. Instead, it explains that proft (there, the building)
is
realized when received, even if it cannot be physically sep-
arated from the capital (there, the land).
In dispensing with the realization requirement, the Ninth
Circuit also cited Helvering v. Horst. But Horst, like
Bruun, emphasizes that realization does not require cash in
hand—not that realization is irrelevant. In Horst, “the
owner of negotiable bonds . . . detached from them negotiable
interest coupons shortly before their due date and delivered
them as a gift to his son who in the same year collected them
at maturity.” 311 U. S., at 114. The bond owner insisted
that the interest coupons were not income taxable to him,
because his son owned them at the time they came due. See
id., at 114–115. We rejected the argument that the bond
owner could “escape all tax by giving away his right to in-
come in advance of payment.” Id., at 116. “The power to
dispose of income is the equivalent of ownership of it.” Id.,
at 118. And while the donor chose not to take the interest
itself, he still “realized the fruits of his investment.” Id., at
117 (emphasis added). Realization does not depend on how
the user chooses to enjoy the income—whether through “the
purchase of goods at the corner grocery, the payment of his
debt there, or such non-material satisfactions as may result
from . . . a gift to his favorite son.” Ibid. Far from dis-
avowing the realization requirement, the Court emphasized
that a taxpayer cannot escape realization (and therefore tax
liability) by giving away the fruit of his capital.
In sum, realization may take many forms, but our prece-
dent uniformly holds that it is required before the Govern-
ment may tax fnancial gain without apportionment. Real-
ization is a question of substance, not form. Diedrich, 457
U. S., at 195. In general, realization is “the last step . . . by
which [one] obtains the fruition of the economic gain which
has already accrued to him.” Horst, 311 U. S., at 115. Our
cases describe many ways income might be realized; a rigid
defnition does not capture them all. See, e. g., MacLaughlin

612 MOORE
v. UNITED STATES
Barrett, J., concurring in judgment
v. Alliance Ins. Co., 286 U. S. 244, 249 (1932) (“sale or other
dispositi
on of property”); Safety Car, 297 U. S., at 93 (“profts
owing to a patentee by the infringer of a patent”); Kirby
Lumber, 284 U. S., at 2–3 (“clear gain” resulting from corpo-
ration repurchasing bonds it issued for less than the corpora-
tion had initially “received [for] their par value”). The com-
mon thread is that to realize income, one must receive
something new and valuable beyond the property she al-
ready owns.
II
Though the Moores did not realize income as shareholders,
KisanKraft realized income as a corporation—profts from
supplying farm equipment to customers in India. The Gov-
ernment argues that, because the MRT targets KisanKraft's
realized income, it falls within the Sixteenth Amendment
and is not subject to the apportionment rule. Brief for
United States 42. But the question is not whether some
taxable person or entity has realized income at some point.
Rather, as the Court emphasizes, we must determine
whether Congress has the power to tax the Moores on in-
come that KisanKraft realized. Ante, at 584. Put differ-
ently, can Congress disregard KisanKraft's corporate form,
attribute KisanKraft's income to its shareholders, and tax its
shareholders on that income?
The Court concludes that it can, describing our case law
as “clear and defnitive” in the Government's favor. Ante,
at 589. I read our cases differently. As I understand our
precedent, it leaves room for Congress to disregard the cor-
porate form in some circumstances. But that is not because
Congress—as the Court suggests—can treat corporations
interchangeably with partnerships, whose partners have
always been subject to pass-through taxation on the partner-
ship's income. See United States v. Basye, 410 U. S. 441,
453–454 (1973). Rather, our cases allow Congress to disre-
gard the corporate form to determine whether the share-
holder received income in substance, if not in form.
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613
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A
Our
precedent suggests that Congress's power to attribute
a corporation's income to its shareholders for tax purposes is
limited. Eisner v. Macomber is the most recent case ad-
dressing this issue—and it was decided more than a century
ago. There, the Standard Oil Company of California chose
to reinvest its profts back into the corporation rather than
distributing them to shareholders. 252 U. S., at 200. Those
retained earnings caused an imbalance in the corporation's
capital account. So to adjust its books, Standard Oil de-
clared a stock dividend that issued new shares to existing
shareholders while diluting the value of their previous
shares—which left the shareholders in the same fnancial po-
sition as before the transaction. See id., at 200–201, 212.
The Court held that shareholder Myrtle Macomber did not
realize income from the stock dividend because she “re-
ceived nothing out of the company's assets for [her] separate
use and beneft.” Id., at 211. The shareholder's original in-
vestment “still remains the property of the company, and
subject to business risks which may result in wiping out the
entire investment.” Ibid. The stock dividends were “evi-
denc[e]” that her capital previously had appreciated, but the
dividends themselves “add[ed] nothing to” her property and
were therefore not income derived from it. Id., at 212
(while the “shareholder is the richer because of an increase
of his capital . . . he has not realized or received any income
in the transaction”).
3
Importantly for our purposes, the Court also rejected the
Government's theory that Congress could attribute the cor-
poration's income to its shareholders. See id., at 213. The
Court expressed “no doubt of the power or duty of a court
to look through the form of the corporation and determine
the question of the stockholder's right, in order to ascertain
3
The Court today does not cast doubt on Macomber's holding that ap-
preciation is not income. See ante, at 599.
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whether he has received income taxable by Congress without
appor
tionment.” Ibid. (emphasis added). But the Court
would not “disregard the essential truth disclosed”: It would
not “ignore the substantial difference between corporation
and stockholder” and “treat the entire organization as un-
real; look upon stockholders as partners, when they are not
such . . . and indulge the fction that they have received and
realized a share of the profts of the company which in truth
they have neither received nor realized.” Id., at 214. The
Court therefore refused to uphold the tax as a tax on attrib-
uted corporate income.
That left one potential justifcation for the tax—that the
Direct Tax Clause's apportionment requirement did not
apply to taxes on the stockholder's undivided interest in the
corporation. The Court rejected that argument too, adher-
ing to Pollock's holding that a tax on a shareholder's owner-
ship interest is a tax on property. The Court explained that
Pollock “overruled” the holding of Collector v. Hubbard, 12
Wall. 1 (1871), that Congress could “tax without apportion-
ment a stockholder's interest in accumulated earnings prior
to dividend declared,” Macomber, 252 U. S., at 218. The
Court acknowledged that the Sixteenth Amendment had
overruled Pollock's holding that a tax on income derived
from property must be apportioned. 252 U. S., at 219. But
it stressed that the Sixteenth Amendment did not otherwise
disturb the law concerning the Direct Tax Clause—including
Pollock's holding that the Clause applies to “property, real
and personal.” Id., at 206; see id., at 219 (“[T]he Amend-
ment applies to income only”). Because a stockholder's
ownership interest in the corporation is personal property—
“capital, not income”—Congress must apportion any tax on
it. Ibid.
Today, the Court does not dispute either that income re-
quires realization or that a tax on stock ownership must be
apportioned. Instead, it says that the income of a closely
held foreign corporation can be attributed to its shareholders
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615
Barrett, J., concurring in judgment
for tax purposes. That might be right, but the Court's rea-
sons
for saying so are wrong: It dismisses the “attribution”
portion of Macomber as dicta and argues that four subse-
quent cases undercut it. Ante, at 589. I disagree. None
of these cases contradicts Macomber's admonition that Con-
gress cannot “look upon stockholders as partners . . . when
they are not”; Congress may not “indulge the fction that
they have received and realized a share of the profts of the
company” when they have not. 252 U. S., at 214; see also
Helvering v. Griffths, 318 U. S. 371, 376–377, and n. 11
(1943). Rather, the Court's cases all illustrate the principle
that the validity of an income tax must be assessed “accord-
ing to truth and substance, [not] form.” Macomber, 252
U. S., at 206.
Burk-Waggoner Oil Assn. v. Hopkins upheld Congress's
power to tax an “unincorporated joint stock association” as
a corporation even though state law treated it as a partner-
ship. 269 U. S. 110, 110–111 (1925). We disregarded the
state-law label because the associations acted as corpora-
tions: They had “a fxed capital stock divided into shares,”
they “manage[d] their affairs by a board of directors and ex-
ecutive offcers,” and they “conduct[ed] their business in the
general form and mode of procedure of a corporation.” Id.,
at 113–114. “[N]othing in the Constitution,” we explained,
“precludes Congress from taxing as a corporation an associa-
tion which, although unincorporated, transacts its business
as if it were.” Id., at 114. Burk-Waggoner thus held that
for tax purposes, Congress could treat a partnership like a
corporation when it acts like a corporation. We did not de-
cide whether Congress may treat a corporation like a part-
nership—e. g., attributing its income to shareholders—when,
in truth and substance, it operates as a corporation.
Next up is Burnet v. Leininger, 285 U. S. 136 (1932). Al-
though that case involved a partnership, the issue was about
the “anticipatory assig nment of income doctr ine. ” See
Commissioner v. Banks, 543 U. S. 426, 433–434 (2005) (“A
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taxpayer cannot exclude an economic gain from gross income
by
assigning the gain in advance to another party” (citing,
inter alia, Lucas v. Earl, 281 U. S. 111, 114–115 (1930)); 1 B.
Bittker, J. Eustice, G. Goldstein, & T. Brantley, Federal In-
come Taxation of Corporations and Shareholders ¶2.07[3]
(2024). The taxpayer, who happened to be one-half partner
in a laundry business, tried to reduce his tax liability by as-
signing a portion of his income to his wife. 285 U. S., at 141.
We rejected that artifce and affrmed Congress's ability to
“ta[x] the salary and fees of the person who earned them.”
Id., at 141–142 (citing Lucas, 281 U. S., at 114). This case,
too, is about classifying taxes according to substance rather
than form.
The Court also invokes Heiner v. Mellon, which blesses
Congress's power to tax “partners” on their “proportionate
share of the net income of the partnership” even where the
partnership's income is not “currently distributable” to the
partners under state law. 304 U. S. 271, 280–281 (1938).
The case rests on the “axiomatic” and “frmly established”
rule of partnership taxation that “each partner must pay
taxes on his distributive [i.e., proportional] share of the part-
nership's income without regard to whether that amount is
actually distributed to him.” Basye, 410 U. S., at 453–454
(discussing Heiner). Given the unique partnership context,
Heiner sheds no light on Congress's power to tax sharehold-
ers on a corporation's income.
4
Finally, in Helvering v. National Grocery Co., 304 U. S.
282 (1938), the Court sustained a defciency tax imposed on
4
Partnerships are distinct from corporations in many other fundamental
ways. For example, partnerships traditionally do not have a legal iden-
tity distinct from the partners and do not enjoy the limited liability charac-
teristic of the corporate form. They are instead “an aggregation of indi-
viduals operating the business as co-owners with individual rights and
duties.” 1 J. Cox & T. Hazen, Law of Corporations § 1.07 (3d ed. 2010).
For purposes of federal diversity jurisdiction, partnerships are citizens
wherever their partners are, whereas corporations have citizenship dis-
tinct from their shareholders. See Carden v. Arkoma Associates, 494
U. S. 185, 187–189 (1990).
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a corporation that was used to shelter the income of its sole
shareholder
. (Notably, the corporation, not the shareholder,
was the taxpayer.) In the course of rejecting the corpora-
tion's various challenges to the tax, the Court opined that
“Kohl, the sole owner of the business, could not by conduct-
ing it as a corporation, prevent Congress, if it chose to do so,
from laying on him individually the tax on the year's profts.”
Id., at 288. That dictum, if correct, is consistent with Ma-
comber's recognition that courts can look through the corpo-
rate form to determine the substance of the shareholder's
relationship to the income. Because National Grocery's in-
come was really just the income of Kohl, its sole owner, the
Court suggested that attributing it to him for tax purposes
would be permissible.
Thus, in matters of corporate form and income attribu-
tion—as in the defnition of income—labels do not control.
But acknowledging that substance controls is a far cry from
asserting that Congress is free to wholly disregard the cor-
porate form. That would permit Congress to tax the share-
holder without regard to the substance of her relationship to
the corporation and would contradict Macomber's holding
that Standard Oil's income could not be attributed to its
shareholders. See 252 U. S., at 213–214. Our precedent
does not give Congress carte blanche to attribute corporate
income to a shareholder. Instead, it suggests that Congress
has a limited power to do so that depends on the relationship
between the shareholder and the income.
5
5
The Court asserts that Congress no longer observes Macomber's dis-
tinction between shareholders and the corporate entity for tax purposes.
Ante, at 587. That paints an incomplete picture. After Macomber, Con-
gress ended its longstanding practice of attributing corporate income to
shareholders when the corporation operated as a tax shelter. See Ivan
Allen Co., 422 U. S., at 624–626, and n. 8; Griffths, 318 U. S., at 377, n. 12,
385. That practice reemerged in the 1930s when Congress began taxing
shareholders of closely held foreign corporations on undistributed corpo-
rate earnings. Revenue Act of 1937, § 201, 50 Stat. 822. To my knowl-
edge, Congress has not returned to that approach for domestic or widely
held corporations of the kind Macomber considered. And while Congress

618 MOORE
v. UNITED STATES
Barrett, J., concurring in judgment
B
Although
I believe that the Court today is too quick to
bless the attribution of corporate income to shareholders, its
holding is narrow. The Court affrms Congress's power to
tax shareholders on “the undistributed income of American-
controlled foreign corporations,” but it says that the Due
Process Clause cabins that power by requiring income attri-
butions not to be “arbitrary.” Ante, at 598–599. The arbi-
trariness inquiry, the Court previews, turns on “the taxpay-
er's relationship to the underlying income.” Ante, at 590,
n. 4 (citing Burnet v. Wells, 289 U. S. 670, 678–679 (1933)).
I agree that the Constitution prohibits Congress from arbi-
trarily attributing to the taxpayer someone else's income.
Our cases have located that limit in the Due Process Clause.
See Burnet, 289 U. S., at 678–679; Hoeper v. Tax Comm'n of
Wis., 284 U. S. 206, 215 (1931) (“That which is not in fact the
taxpayer's income cannot be made such by calling it in-
come”). But an arbitrariness limit is implicit in the Six-
teenth Amendment too. Virtually all property was income
at some point. Ford Motor Company uses its income to buy
steel for making trucks. But surely Congress cannot attrib-
ute Ford's earnings to anyone who owns an F–250. The
Amendment's reference to “derived” income presupposes
that the income belongs to the taxpayer, or is at least fairly
attributable to her. Otherwise the taxpayer 's property
(e. g., the truck she drives) could be taxed without apportion-
ment just because it was once somebody else's income (e. g.,
the earnings Ford used to purchase the steel).
continues to attribute income of certain closely held foreign corporations
to their U. S. shareholders today, see 26 U. S. C. § 951 et seq. (“subpart F”),
doing so might be consistent with Macomber's recognition that Congress
can disregard the corporate form when, in substance, it is reasonable to
treat the income of the corporation as that of the shareholders. The
Court's “arbitrariness” test seems to get at a similar point, but, by dismiss-
ing the relevance of the corporate form altogether, it confuses the analysis.
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Barrett, J., concurring in judgment
While an arbitrariness limit on income attribution surely
exists,
its contours are uncertain. We have never before ap-
plied the arbitrariness test to a tax law that attributes a
corporation's income to its shareholders. At oral argument,
the Government identifed a series of factors that the Court
has considered in attribution cases involving license agree-
ments and trusts. See Tr. of Oral Arg. 119–123. One is
whether the taxpayer has “suffcient power and control over
. . . the income” that it is “reasonable to treat him as the
recipient of the income for tax purposes.” Commissioner v.
Sunnen, 333 U. S. 591, 604 (1948). Another is whether the
taxpayer receives a special “privilege or beneft” from the
entity that earns the income. Burnet, 289 U. S., at 679. A
third is whether the corporation is foreign and thus outside
the reach of an accumulated earnings tax. Cf. Ivan Allen
Co., 422 U. S., at 624. These factors may serve as a useful
guide for lower courts when applying today's decision to
taxes that attribute income from other types of corporations
to an individual taxpayer. Just because Congress can at-
tribute income of a closely held foreign corporation like
KisanKraft to its shareholders does not mean it has equal
power to attribute the income of a publicly traded domestic
corporation to anyone holding a few shares in her retire-
ment account.
C
Congress's power to attribute the income of closely held
corporations to their shareholders is a diffcult question—
and unfortunately, the parties barely addressed it. Without
focused briefng on the attribution question, I would not re-
solve it. Subpart F and the MRT may or may not be consti-
tutional, nonarbitrary attributions of closely held foreign
corporations' income to their shareholders. In this litiga-
tion, however, the Moores have conceded that subpart F is
constitutional. Tr. of Oral Arg. 9. And I agree with the
Court that subpart F is not meaningfully different from the
MRT in how it attributes corporate income to shareholders.
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Ante, at 596–597. Taxpayers generally bear the burden to
show
they are entitled to a refund. United States v. Janis,
428 U. S. 433, 440 (1976); see also Haaland v. Brackeen, 599
U. S. 255, 277–278 (2023) (burden to show unconstitutional-
ity). Given the Moores' concession, they have not met that
burden here. For that reason, I concur in the Court's judg-
ment affrming the judgment below.
Justice Thomas, with whom Justice Gorsuch joins,
dissenting.
Charles and Kathleen Moore paid $14,729 in taxes on an
investment that never yielded them a penny. They chal-
lenge that tax—the Mandatory Repatriation Tax (MRT)—
as unconstitutional. As relevant, they argue that a tax on
unrealized investment gains is not a tax on “incomes” within
the meaning of the Sixteenth Amendment, and it therefore
cannot be imposed “without apportionment among the sev-
eral States.”
The Moores are correct. Sixteenth Amendment “ in-
comes” include only income realized by the taxpayer. The
text and history of the Amendment make clear that it re-
quires a distinction between “income” and the “source” from
which that income is “derived.” And, the only way to draw
such a distinction is with a realization requirement. Our
precedent says as much. In Eisner v. Macomber, 252 U. S.
189 (1920), the Court explained that “the characteristic and
distinguishing attribute of income,” as the term is used in
the Sixteenth Amendment, is that it is “received or drawn
by the recipient (the taxpayer) for his separate use, beneft
and disposal.” Id., at 207. Because the Moores never actu-
ally received any of their investment gains, those unrealized
gains could not be taxed as “income” under the Sixteenth
Amendment.
The Ninth Circuit wrongly rejected the Moores' challenge
on the ground that “realization of income is not a constitu-
tional requirement.” 36 F. 4th 930, 936 (2022). That con-
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Thomas, J., dissenting
clusion cannot be reconciled with the Sixteenth Amendment
as
the Court correctly interpreted it in Macomber. We
therefore granted cer ti orar i to answer the questi on
“[w]hether the Sixteenth Amendment authorizes Congress
to tax unrealized sums without apportionment among the
states,” i. e., as “incomes.” Pet. for Cert. i.
Today, the Court upholds the MRT only by ignoring the
question presented. It does “not address the Government's
argument that a gain need not be realized to constitute in-
come under the Constitution.” Ante, at 589, n. 3. Instead,
the Court answers the question “whether Congress may at-
tribute an entity's realized and undistributed income to the
entity's shareholders or partners, and then tax the share-
holders or partners on their portions of that income.” Ante,
at 584. After changing the subject, the majority upholds
the MRT by relying on unrelated precedent to derive a “clear
rule” that “Congress can attribute the undistributed income
of an entity to the entity's shareholders or partners.” Ante,
at 586–587.
I respectfully dissent. The Ninth Circuit erred by con-
cluding that realization is not a constitutional requirement
for income taxes. And, the majority's “attribution” doctrine
is an unsupported invention.
I
The Sixteenth Amendment provides: “The Congress shall
have power to lay and collect taxes on incomes, from what-
ever source derived, without apportionment among the sev-
eral States, and without regard to any census or enumera-
tion.” The central dispute in this case—at least, in the case
briefed by the parties—concerns the meaning of the word
“incomes” in the Amendment. The Moores defne “income”
as “ `a gain, a proft, [or] something of exchangeable value'
[that] is `received or drawn by the recipient (the taxpayer)
for his separate use, beneft and disposal.' ” Brief for Peti-
tioners 1 (quoting Macomber, 252 U. S., at 207). This idea—
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Thomas, J., dissenting
that “income” is only something actually available for the
t
axpayer's use—is known as “realization.” The Govern-
ment rejects the realization requirement, arguing instead
that “income” captures “all economic gains” whether or not
they are actually realized. Brief for United States 14 (inter-
nal quotation marks omitted).
“Income” in the Sixteenth Amendment refers only to in-
come realized by the taxpayer. The Amendment resolved a
long-running confict over the scope of the Federal Govern-
ment's taxing power. It paved the way for a federal income
tax by creating a new constitutional distinction between
“income” and the “source” from which that income is “de-
rived.” Drawing that distinction necessitates a realization
requirement.
A
To understand the text of the Sixteenth Amendment—and,
in particular, the meaning of the word “income”—one must
frst understand how the Amendment came about. The
Constitution's original taxing provisions divided taxes into
two classes: direct and indirect taxes. And, as part of a deli-
cate constitutional compromise, the original taxing provi-
sions required direct taxes to be apportioned among the
States based on population. Disputes about the scope of the
direct-tax category came to a head in Pollock v. Farmers'
Loan & Trust Co., 158 U. S. 601 (1895), when this Court held
that many income taxes were direct taxes subject to the ap-
portionment requirement. In reaching this conclusion, the
Court held that income could not be distinguished from its
source for purposes of classifying an income tax as direct or
indirect. The Sixteenth Amendment was ratifed to over-
rule that holding from Pollock, and it can therefore be under-
stood only in the context of Pollock and the preceding
history.
1
The Sixteenth Amendment modifed the Constitution's
original regulations of Congress's taxing power. The text
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Thomas, J., dissenting
of those provisions is therefore the natural starting point for
i
nterpreting the Sixteenth Amendment. The Taxing Clause
provides Congress with broad authority to impose taxes.
Other Clauses, including the Direct Tax Clause, classify dif-
ferent kinds of taxes and set corresponding limitations on
Congress's power to impose them. The Sixteenth Amend-
ment alters those rules by making clear that taxes on income
are not subject to the limitations imposed on direct taxes.
The Constitution gives Congress the power to impose
“Taxes” of any kind, including income taxes. The Taxing
Clause provides that “Congress shall have Power To lay and
collect Taxes, Duties, Imposts and Excises, to pay the Debts
and provide for the common Defence and general Welfare of
the United States; but all Duties, Imposts and Excises shall
be uniform throughout the United States.” Art. I, § 8, cl. 1.
This Clause is the sole source of Congress's authority to im-
pose taxes. And, that authority is broad. Nothing in the
Constitution limits the kinds of taxes that Congress may im-
pose. As the Court has explained, “the authority conferred
upon Congress by” the Taxing Clause “is exhaustive and em-
braces every conceivable power of taxation.” Brushaber v.
Union Pacifc R. Co., 240 U. S. 1, 12 (1916).
But, the Constitution restricts the manner in which Con-
gress may impose taxes. It accomplishes this by dividing
taxes into two classes—direct and indirect taxes—and im-
posing a distinct limitation applicable to each of those
classes.
1
Start with the class of direct taxes. The Direct Tax
Clause provides: “No Capitation, or other direct, Tax shall
be laid, unless in Proportion to the Census or Enumeration
1
The General Welfare Clause—quoted alongside the rest of the Taxing
Clause above—is also an important “qualifcation on the substantive tax-
ing power.” Health and Hospital Corporation of Marion Cty. v. Talev-
ski, 599 U. S. 166, 206 (2023) (Thomas, J., dissenting). But, because this
case does not implicate that limitation, I do not further explore the Gen-
eral Welfare Clause.

624 MOORE
v. UNITED STATES
Thomas, J., dissenting
herein before directed to be taken.” Art. I, § 9, cl. 4. The
Constituti
on does not expressly identify any tax as direct
other than a “Capitation.” A “capitation”—also called a
“poll tax”—is “[a] fxed tax levied on each person within a
jurisdiction.” Black's Law Dictionary 1760 (11th ed. 2019)
(defning “tax”). At the founding, the class of direct taxes
was also understood to include taxes on real property, and
perhaps taxes on personal property. See infra, at 632–634.
Indirect taxes, on the other hand, include “Duties, Imposts
and Excises.” Art. I, § 8, cl. 1. These were taxes that peo-
ple could avoid by adjusting their behavior—generally, taxes
on articles of consumption. See The Federalist No. 21,
p. 116 (E. Scott ed. 1898) (A. Hamilton). “Indirect taxes”
are not identifed by that name in the Constitution. But,
the Constitution's delineation of a direct-tax category signals
the existence of a complementary indirect-tax category.
For each class of taxes, the Constitution limits Congress's
power with a distinct rule. Direct taxes are subject to the
rule of apportionment. The Constitution twice specifes
that “direct Taxes shall be apportioned among the several
States . . . according to their respective Numbers.”
2
Art. I,
§ 2, cl. 3; see also § 9, cl. 4. A tax is apportioned among the
States if “each State pays in proportion to its population.”
National Federation of Independent Business v. Sebelius,
567 U. S. 519, 570 (2012). An example best demonstrates
what apportionment requires. Suppose that Congress im-
posed a direct tax on houses, and apportioned the tax such
that two States of equal population were both responsible
for paying $100 in taxes. If the frst State contained 100
houses and the second State only 10, houses in the frst State
would be taxed at $1 each ($100 divided by 100 houses),
whereas houses in the second State would be taxed at $10
each ($100 divided by 10 houses).
2
Those “Numbers” were originally “determined by adding to the whole
Number of free Persons . . . three ffths of all other Persons.” Art. I, § 2,
cl. 3; but see Amdt. 14, § 2.
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Indirect taxes are subject to the rule of uniformity: “[A]ll
Duties,
Imposts and Excises shall be uniform throughout the
United States.” Art. I, § 8, cl. 1. The Court has explained
that “the words `uniform throughout the United States' . . .
signify . . . a geographical uniformity.” Knowlton v. Moore,
178 U. S. 41, 106 (1900). In other words, a “tax is uniform
when it operates with the same force and effect in every
place where the subject of it is found.” Head Money Cases,
112 U. S. 580, 594 (1884). So, a duty on the importation of
tea must impose the same rate on imports coming through
Boston as those coming through Savannah.
3
The Sixteenth Amendment, on its face, narrows the scope
of the apportionment requirement. While direct taxes must
be apportioned, the Sixteenth Amendment allows Congress
to tax incomes “without apportionment.” But, it did not re-
move the Direct Tax Clause or the apportionment require-
ment from the Constitution entirely. To appreciate the ex-
tent of the change, and its implications for the meaning of
the word “incomes,” it is necessary to examine the origins
of the Direct Tax Clause and how disputes about the Clause's
scope led to the Sixteenth Amendment.
2
The Direct Tax Clause was a critical aspect of the balance
between state and federal power in the original design of
3
For the sake of completeness, three remaining taxing provisions in the
Constitution of 1789 bear mentioning. First, “a Tax or duty may be im-
posed” on the “Importation of such Persons as any of the States now exist-
ing shall think proper to admit”—i. e., upon the foreign slave trade—“not
exceeding ten dollars for each Person.” Art. I, § 9, cl. 1. Second, “[n]o
Tax or Duty shall be laid on Articles exported from any State.” Cl. 5.
And third, “[n]o State shall, without the Consent of the Congress, lay any
Imposts or Duties on Imports or Exports” (with limited exceptions). § 10,
cl. 2. Together, these provisions defne the limits of state and federal
taxing power with respect to foreign and interstate commerce. I mention
them below only in passing. But, like the division between direct and
indirect taxes, these provisions refect the delicate balance that the Consti-
tution struck regarding the scope of the federal taxing power.
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Thomas, J., dissenting
the Constitution. It is easy today to take the federal taxing
power
for granted. But, at the founding, allowing the Na-
tional Government to exercise such a power was a radical
proposal. The importance of the limitations imposed by the
Direct Tax Clause to the compromise struck by the Constitu-
tion has signifcant implications for the meaning of “incomes”
in the Sixteenth Amendment.
The American colonial experience inspired widespread dis-
trust of taxation. See, e. g., Declaration of Independence
¶19. The Articles of Confederation refected that distrust.
Under the Articles, the entire taxing power was exclusive to
the States. The National Government had no power to im-
pose taxes of any kind. The only revenue for the National
Government was funds “supplied by the several states” pur-
suant to requisitions “in proportion to the value of all land
within each state.” Articles of Confederation, Art. 8. And,
the taxes for paying those requisitions were imposed solely
by the States themselves.
The requisition system showed immediate signs of in-
adequacy. Raising funds through requisitions was often in-
effective because States felt little urgency to pay their ob-
ligati ons. See Federa l ist No. 30, at 160 (A. Hamilton)
(explaining that requisitions were formally “obligatory upon
the States,” but that “in practice” the right to disregard
them was “constantly exercised”). And, the fnancial strain
placed on the National Government by the Revolutionary
War made that ineffciency an existential threat to the fedg-
ling Nation.
The Continental Congress quickly concluded that fnancing
the war effort would require another source of revenue for
the National Government. “ [T]o establish the national
credit,” the Congress's fnance Committee reported in De-
cember 1780, “it will be necessary” for the States to “vest[t]
in Congress” “[t]he exclusive right to duties arising on cer-
tain imported articles.” 18 Journals of the Continental Con-
gress 1774–1789, p. 1157 (G. Hunt ed. 1910). The Congress
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627
Thomas, J., dissenting
therefore proposed the Impost of 1781, “recommend[ing] to
the
several states, as indispensably necessary, that they . . .
vest a power in Congress, to levy for the use of the United
States, a duty of fve per cent.” on most imports. 19 Jour-
nals of the Continental Congress 112 (1912) (footnote omit-
ted). The President of the Continental Congress transmit-
ted the proposal to the States on February 8, 1781, under
a cover letter stressing the “precarious Manner” in which
Congress had to fund the Army under the requisition sys-
tem. 5 Letters of Members of the Continental Congress 564
(E. Burnett ed. 1931).
Every State but Rhode Island approved the Impost of
1781. See 1 Documentary History of the Ratifcation of the
Constitution 63 (M. Jensen ed. 1976) (Documentary History).
But, because the Articles of Confederation required amend-
ments like the impost to be approved unanimously, Rhode
Island's refusal defeated the amendment. Articles of Con-
federation, Art. 13; see also 23 Journals of the Continental
Congress 783–784 (1914). In a letter to the Confederation
Congress,
4
the Rhode Island Legislature explained that it
rejected the impost “[b]ecause it would be unequal in its op-
eration, bearing hardest on the most commercial states,” in-
cluding Rhode Island. Id., at 788. One State's jealousy of
its lucrative tax base prevented the reform of the Articles'
fawed requisition system.
A year later, the Confederation Congress again proposed
a national taxing power with the Impost of 1783. The pro-
posal languished for years, and then failed after New York
refused its consent in February 1787. See 1 Documentary
History 190, n. 3. As the second impost awaited its slow
death, the Confederation Congress issued a dire warning
about the fnancial condition of the National Government in
February 1786. See 30 Journals of the Continental Con-
4
After the ratifcation of the Articles of Confederation in March 1781,
the Continental Congress became the Confederation Congress. See 1
Documentary History 136.
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Thomas, J., dissenting
gress 70, 75 (J. Fitzpatrick ed. 1934). Faced with mounting
threats
to the security of the country, and requisitions that
had become “so irregular in their operation” as to be “dan-
gerous to the welfare and peace of the Union,” Congress as-
serted “that the crisis has arrived” when the people of the
United States must decide whether, “for want of a timely
exertion in establishing a general revenue,” they will risk
both the existence of the Union and the liberty that they
won in the Revolution. Id., at 72, 75.
The practical impossibility of reforming the Articles to in-
clude a national taxing power was among the primary rea-
sons for the Constitutional Convention of 1787. John Adams
later refected as Vice President: “The opposition of Rhode
Island to the impost seems to have been the instrument
which providence thought ft to use for the great purpose
of establishing the present constitution.” 26 Documentary
History 743 (J. Kaminski et al. eds. 2013). In February 1787,
the Continental Congress endorsed the call for a convention
of delegates in Philadelphia. See 32 Journals of the Conti-
nental Congress 74 (R. Hill ed. 1936). Virginia had been the
frst State to answer that call, and in appointing delegates,
made prominent reference to the Confederation Congress's
“alarming representations” about the poor state of public f-
nance. 1 Documentary History 196–198 (discussing Con-
gress's warning of February 1786). The Virginia delegation
likewise emphasized the “ineffciency of requisitions” when
it opened the proceedings at the Convention. 1 Records of
the Federal Convention of 1787, pp. 18–19 (M. Farrand ed.
1911) (Farrand's Records).
The possibility of a federal taxing power was highly con-
troversial at the Constitutional Convention, despite wide-
spread acknowledgment of the need to reform public fnance.
The Virginia plan—a broad outline that was selected as the
basis for the new Government—did not go so far as to in-
clude a federal taxing power. The Virginia delegation ap-
parently considered it less controversial to open the Conven-
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629
Thomas, J., dissenting
tion with a proposal that gave the Federal Government the
abi
lity to enforce requisitions against the States by military
force. Id., at 21. The New Jersey plan, by contrast, did
include federal taxing powers. Id., at 243. Reason pre-
vailed, and the Convention judged it more prudent to risk a
federal taxing power than the extraction of federal revenue
by the use of military force against the States. See id., at
54 (“[Madison] observed that the more he refected on the
use of force [against delinquent States], the more he doubted
the practicability, the justice and the effcacy of it”). The
Convention proposed the Constitution with its taxing provi-
sions as described above; they would be ratifed unchanged.
See 2 id., at 590, 594, 596; supra, at 623–625.
Unsurprisingly, the proposed creation of a federal taxing
power provoked many of the most passionate criticisms by
opponents of ratifcation. The Antifederalists warned that
a federal taxing power would destroy the state governments.
Brutus wrote that the central question presented by ratif-
cation was “whether the thirteen United States should be
reduced to one great republic . . . or whether they should
continue thirteen confederated republics.” Brutus No. 1
(Oct. 18, 1787), in 2 The Complete Anti-Federalist 364 (H.
Storing ed. 1981). In support of his dramatic thesis, Brutus
asserted that “the individual states must very soon be anni-
hilated,” in part by the federal taxing power. Id., at 365.
The destructive force of the federal taxing power, as Bru-
tus explained it, arose from the fact that it forced the States
to compete with the Federal Government for a tax base.
Because the Constitution prevented the States from emitting
paper money and laying duties or imposts, “[t]he only mean
therefore left, for any state to support its government and
discharge its debts, is by direct taxation.” Id., at 366. But,
even the ability to resort to direct taxes would be fruitless,
because the power of direct taxation was shared with the
Federal Government. Ibid. Brutus thus argued that once
the Federal Government “begins to exercise the right of tax-
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Thomas, J., dissenting
ation in all its parts, the legislatures of the several states
w
ill fnd it impossible to raise monies to support their gov-
ernments” and then “dwindle away.” Ibid. Other Anti-
federalists sounded the same theme at the state ratifying
conventions. See, e. g., 3 Debates on the Constitution 29
(J. Elliot ed. 1836) (Elliot's Debates) (George Mason arguing
in Virginia that the “two concurrent powers” of the State
and Federal Governments to impose taxes directly upon the
people “cannot exist long together”).
The Federalists' defense of the new national taxing power
stressed that the Federal Government would impose direct
taxes only sparingly, as needed to supplement the revenue
from imposts in emergencies. Madison explained that
“[w]hen . . . direct taxes are not necessary, they will not be
recurred to. It can be of little advantage to those in power
to raise money in a manner oppressive to the people.” Id.,
at 95. And, Federalists highlighted the protection provided
by the rule of apportionment. Hamilton explained that di-
rect taxes “never can oppress a particular state by an un-
equal imposition; because the Constitution has provided a
fxed ratio, a uniform rule, by which this must be regulated.”
2 id., at 365. Madison argued that because representation
and direct taxation were apportioned by the same formula,
unjust taxes could not feasibly be imposed; those responsible
for paying direct taxes are correspondingly able to defeat
their imposition. See 3 id., at 256–257.
5
5
Severa l st ate rati fy i ng conventi ons proposed amendments to
strengthen the protection provided by the Direct Tax Clause. For exam-
ple, the Massachusetts ratifying convention proposed that the Constitution
be modifed to allow direct taxes only “when the moneys arising from the
impost and excise are insuffcient for the public exigencies,” and even then
only after Congress frst attempted to obtain such funds through requisi-
tions. 1 Elliot's Debates 322–323. The ratifying conventions of South
Carolina, New Hampshire, New York, and Rhode Island concurred in the
proposed amendment. Id., at 325, 326, 329, 336. Although those propos-
als never became part of the Constitution, they demonstrate the impor-
tance that many ratifying States placed upon limitations to Congress's
power to lay direct taxes.
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631
Thomas, J., dissenting
With the Constitution's ratifcation, the requisition system
was
replaced by a system that gave the Federal Government
the taxing power it had lacked under the Articles of Confed-
eration. That increase in power came at the expense of the
States. The States gave up the power to tax interstate and
foreign commerce, which was expected to be the main source
of federal revenue. They did retain the power of direct tax-
ation, but had to share it with the Federal Government—an
arrangement that motivated signifcant opposition to the new
Constitution. The limitations on the Federal Government's
ability to exercise that concurrent power were thus an essen-
tial component of the constitutional compromise.
3
Postratifcation disagreement about what qualifed as a
“direct tax” would eventually lead to the adoption of the Six-
teenth Amendment. Even though the distinction between
direct and indirect taxes was an important component of the
founding compromise, it was not entirely clear how to distin-
guish between the two classes of taxes. The scope of the
“direct tax” category proved immediately controversial.
And, that controversy eventually came to bear on the ques-
tion of income taxation, with the Court initially concluding
that the Direct Tax Clause was not a barrier to taxing
incomes.
As the Constitution's text made clear, a “Capitation” was
“direct.” Art. I, § 9, cl. 3. And, all agreed that taxes on
land and slaves were considered direct. See 3 Elliot's De-
bates 229. But, beyond that, the precise boundary between
direct and indirect taxes was debatable. An exchange at
the Constitutional Convention preserved in Madison's notes
is often cited on the subject: “Mr King asked what was the
precise meaning of direct taxation? No one answd.” 2 Far-
rand's Records 350.
This Court grappled with the question in a signifcant case
decided soon after ratifcation. In 1794, the Third Congress
passed “An Act laying duties upon Carriages for the convey-
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ance of Persons.” Act of June 5, 1794, ch. 45, 1 Stat. 373.
The
tax was not apportioned among the States. Some op-
posed the tax on the theory that a tax on personal property,
such as carr iages, was a direc t t ax that required
apportionment.
6
When Daniel Hylton failed to pay the tax on his 125 car-
riages, the United States brought a suit against him, and the
case soon found its way to the Supreme Court. Hylton v.
United States, 3 Dall. 171, 171–172 (1796) (Hylton's Case).
“The argument turned entirely upon . . . whether the tax . . .
was a direct tax.” Id., at 172. The four Justices who sat
for the case each agreed that the tax was constitutional, and
the three who offered reasons suggested that “direct” taxes
were limited to capitation and land taxes. But, they did so
with some caution.
Justice Chase was “inclined to think, but [did] not give
a judicial opinion, that the direct taxes contemplated by
the Constitution, are only two, to wit, a capitation, or poll
tax, simply, without regard to property, profession, or any
other circumstance; and a tax on land.” Id., at 175. He
“doubt[ed] whether a tax, by a general assessment of per-
sonal property, . . . is included within the term direct tax.”
Ibid. Justice Paterson observed that “[w]hether direct
taxes, in the sense of the Constitution, comprehend any other
tax than a capitation tax, and tax on land, is a questionable
point.” Id., at 177. Justice Iredell opined that “[p]erhaps
a direct tax in the sense of the Constitution, can mean noth-
ing but a tax on something inseparably annexed to the soil
. . . . A land or poll tax may be considered of this descrip-
tion.” Id., at 183.
6
James Madison, for example, despaired about the unconstitutionality of
the tax in a letter to Thomas Jefferson. See 15 Papers of James Madison
327 (T. Mason, R. Rutland, & J. Sisson eds. 1985) (“And the tax on carriages
succeeded in spite of the Constitution . . . . By breaking down the barri-
ers of the constitution . . . wealth may fnd a precarious defence in the
sheild of justice”).
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Thomas, J., dissenting
Additional disputes over what constituted direct taxation
arose
when the Government resorted to new forms of taxa-
tion to fnance the Civil War. In several cases decided
shortly after the war, the Court relied on Hylton's Case to
conclude that new taxes were indirect. First, the Court
reasoned that “[i]f a tax upon carriages, kept for his own use
by the owner, [was] not a direct tax,” then “a tax upon the
business of an insurance company” was not a direct tax. Pa-
cifc Ins. Co. v. Soule, 7 Wall. 433, 446 (1869). Next, the
Court concluded that a tax on the circulation of bank notes
was also indirect, but it surveyed ratifcation-era sources to
hint at a slightly more expansive defnition of direct taxes.
Veazie Bank v. Fenno, 8 Wall. 533, 544 (1869) (“direct taxes
were such as may be levied by capitation, and on lands and
appurtenances; or, perhaps, by valuation and assessment of
personal property upon general lists”). Finally, the Court
concluded that a tax on the devolution of title to real estate
was indirect, acknowledging that “it never ha[d] been de-
cided” whether any taxes besides “[t]axes on lands . . . and
capitation taxes” were “direct taxes.” Scholey v. Rew, 23
Wall. 331, 347 (1875).
The Civil War also prompted Congress to enact the Na-
tion's frst-ever federal income tax. In 1861, Congress im-
posed a tax of three percent “upon the annual income of
every person residing in the United States, whether such
income is derived from any kind of property, or from any
profession, . . . or from any other source whatever,” to the
extent that income exceeded $800. § 49, 12 Stat. 309. Over
the course of the Civil War, the income tax was paid by as
many as 1 in 10 Union households and accounted for about a
ffth of federal revenues. S. Weisman, The Great Tax Wars
101–102 (2002) (Weisman). The tax remained in force, with
modifcations, until it expired in 1871. § 6, 16 Stat. 257.
The Court did not consider the constitutionality of the
Civil War income tax until a decade after its expiration, in
Springer v. United States, 102 U. S. 586 (1881). The “main

634 MOORE
v. UNITED STATES
Thomas, J., dissenting
question” was whether the tax was an unapportioned direct
t
ax that violated the Direct Tax Clause. Id., at 595. The
Court held that the income tax was not a direct tax. Rely-
ing heavily on Hylton's Case, the Court reasoned “that di-
rect taxes, within the meaning of the Constitution, are only
capitation taxes . . . and taxes on real estate.” 102 U. S., at
602. Accordingly, the income tax at issue was “within the
category of an excise or duty.” Ibid.
7
In summary, after disputes over the scope of the Direct
Tax Clause between the founding and the expiration of the
Civil War income tax, the Court apparently concluded that
direct taxes were limited to poll taxes and taxes on land.
Ibid. But, the Court expressed some doubt as to the proper
classi ficati on of t axes “ levied by . . . va luati on and as-
sessment of personal property.” Veazie Bank, 8 Wall., at
544. Based on that narrow reading of the Direct Tax
Clause, the Court upheld the Civil War income tax against a
constitutional challenge. But, the long-running skirmishes
about direct taxation would soon come to a dramatic climax
following the imposition of the frst federal income tax in
peacetime.
7
In the case before us, the Government relies heavily on another case
involving the Civil War income tax, Collector v. Hubbard, 12 Wall. 1 (1871).
According to the Government, Hubbard “upheld [Congress's] power to”
impose “taxes on undistributed corporate earnings” as “income taxes,”
a result that subsequent decisions “temporarily undermined” until “the
Sixteenth Amendment . . . reinstat[ed]” it. Brief for United States 9.
But, Hubbard is of virtually no relevance to the Sixteenth Amendment.
Contrary to the Government's assertions, the taxpayer in Hubbard made
a statutory argument about the meaning of the word “entitled,” not any
argument about the scope of Congress's power. See Brief for Respondent
in Collector v. Hubbard, O. T. 1870, No. 122, p. 4. Nor did Hubbard uphold
the tax as an income tax. Instead, it interpreted the statute as a tax on
a shareholder's property rights in undistributed profts. 12 Wall., at 18.
Because the taxpayer did not bring a constitutional challenge based on
the Direct Tax Clause, the Court had no occasion to consider the potential
implications of treating the tax as a property tax.
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Thomas, J., dissenting
4
I
next consider the single most important piece of context
for understanding the Sixteenth Amendment: Pollock v.
Farmers' Loan & Trust Co., 158 U. S. 601, the case that the
Amendment overruled. In Pollock, the Court concluded,
for the frst time, that a tax was direct, not apportioned, and
therefore unconstitutional. The Court's reasoning turned
on the premise that the Constitution permits no distinction
between taxing income and taxing the source from which
that income is derived. The holding of Pollock thus meant
that most income taxes would have to be apportioned, a re-
quirement that made them politically unpalatable. See
supra, at 624 (describing possible state-by-state variations
in rates for apportioned taxes). Because the Sixteenth
Amendment overruled the result in Pollock, an accurate un-
derstanding of the case is essential to understanding the
Amendment.
Congress imposed the Nation's frst peacetime income tax
as part of the Revenue Act of 1894. The Act paired a
new tax on the incomes of the wealthiest two percent of
Americans with tariff cuts that would beneft less wealthy
consumers. See Weisman 132–133, 145. The income-tax
component of the Act provided:
“That [from 1895 until 1900] there shall be assessed,
levied, collected, and paid annually upon the gains,
profts, and income received in the preceding calendar
year by [citizens and resident aliens], whether said gains,
profts, or income be derived from any kind of property,
rents, interest, dividends, or salaries, or from any pro-
fession, trade, employment, or vocation . . . , or from any
other source whatever, a tax of two per centum on the
amount so derived over and above four thousand dol-
lars.” § 27, 28 Stat. 553.
The income tax was not apportioned among the States by
population.
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In Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429
(1895),
the Court considered whether the 1894 income tax
was a direct tax that failed to satisfy the Direct Tax Clause's
apportionment requirement. The taxpayer argued that por-
tions of the tax were direct because “imposing a tax on the
income or rents of real estate, imposes a tax upon the real
estate itself.” Id., at 555. And, taking the position that
taxes on personal property are also direct taxes, the tax-
payer argued that “imposing a tax on the . . . income of bonds
or other personal property . . . imposes a tax upon the per-
sonal estate itself.” Ibid.
The Court endeavored to determine what “were recog-
nized as direct taxes” “at the time the Constitution was
framed and adopted.” Id., at 558. The Court considered
historical context, the records of the Constitutional Conven-
tion, the Federalist Papers, other documents from the ratif-
cation debates, the 1794 carriage tax, and Hylton's Case.
157 U. S., at 558–568, 570–572. The Court concluded that
“all taxes on real estate or personal property or the rents or
income thereof were regarded as direct taxes” at the time
the Constitution was ratifed. Id., at 573–574. After reach-
ing a conclusion about the original meaning of the Constitu-
tion, the Court surveyed its precedents and observed that
“in none of them is it determined that taxes on rents or in-
come derived from land are not taxes on land,” and that
“none . . . discussed the question whether a tax on the income
from personalty is equivalent to a tax on that personalty.”
Id., at 579. The Court had some diffculty explaining
Springer, which stated that direct taxes are limited to capi-
tation and land taxes and concluded that a tax on income
was an indirect tax. See supra, at 633–634. But, the Court
returned to “[t]he original record” in Springer to review the
sources of the taxpayer's income, and it distinguished the
case on that ground. 157 U. S., at 578–579.
In the end, the Court concluded that income could not be
distinguished from the source from which it was derived
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Thomas, J., dissenting
for purposes of determining whether a tax on that income
wou
ld be direct or indirect. It was “unable to perceive any
ground” “upon which to rest the contention that real estate
belongs to one of the two great classes of taxes,” i. e., the
direct-tax class, “and the rent or income which is the incident
of its ownership belongs to the other,” i. e., the indirect-tax
class. Id., at 581. It grounded that conclusion in the fact
that the Direct Tax Clause was a federalism provision at the
heart of the constitutional compromise: “If, by calling a tax
indirect when it is essentially direct, the rule of protection
could be frittered away, one of the great landmarks defning
the boundary between the Nation and the States of which it
is composed, would have disappeared, and with it one of
the bulwarks of private rights and private property.” Id.,
at 583.
The Court held that the Act was unconstitutional in part,
“so far as it levies a tax on the rents or income of real es-
tate.” Ibid. But, the Justices divided evenly on the ques-
tion whether the tax was unconstitutional “as to the income
from personal property.” Id., at 586. The case was there-
fore scheduled for rehearing.
After rehearing, the Court extended its logic and held that
a tax on income derived from personal property—like a tax
on income derived from real property—was a direct tax.
158 U. S., at 625. The Court offered a more thorough expla-
nation for why income could not be distinguished from its
source when classifying a tax. It began by observing that
the distinction between direct and indirect taxes was critical
to our system of federalism. By ratifying the Constitution,
the States “gave up the great sources of revenue derived
from commerce” and “retained the power of direct taxation,”
but only concurrently with the Federal Government. Id.,
at 620. Limitations on federal direct taxation offered state
governments a fscal safe haven against expanding federal
authority, in recognition of the fact “that the power to tax
involved the power to destroy.” Id., at 621. “[T]he quali-

638 MOORE
v. UNITED STATES
Thomas, J., dissenting
fed grant” of an apportioned direct-taxation power built se-
cur
ity into the “structure of the government itself . . . by
providing that direct taxation and representation in the
lower house of Congress should be adjusted on the same
measure.” Id., at 621–622.
The Court relied on those federalism principles to reject
the argument “that income is taxable irrespective of the
source from whence it is derived.” Id., at 629. It explained
that the Constitution—read “in its plain and obvious sense”
and in the context of “the circumstances attending the for-
mation of the government”—could not be understood to treat
income “as belonging to a totally different class” of taxation
than the class “which includes the property from whence the
income proceeds.” Id., at 627–628. Such an interpretation
would leave the Direct Tax Clause “utterly illusory and fu-
tile, and the object of its framers defeated.” Id., at 628.
The Court refused to allow the effect of the Direct Tax
Clause to be “refned away by forced distinctions between”
income and source. Ibid.
5
The Sixteenth Amendment was designed to overrule Pol-
lock's obstacle to an income tax, and it was understood by
the public in those terms. Pollock stood in some tension
with the Civil War tax cases, and it was not well received.
Critics likened it to Dred Scott v. Sandford, 19 How. 393
(1857), and the decision became a major issue in the 1896
Presidential election. Weisman 148. By the 1908 Presiden-
tial election, both major political parties supported fnding a
way, Pollock notwithstanding, to impose an income tax.
See E. Seligman, The Income Tax 591–592 (2d ed. 1914).
In 1909, President Taft pledged his support for an income-
tax amendment. In a widely published message to Con-
gress, he explained that “[t]he decision of the Supreme
Court” in Pollock “deprived the national government of a
power which” it “ought to have.” Taft Asks for Tax, Wash-
ington Post, June 17, 1909, p. 4. Taft therefore asked Con-
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639
Thomas, J., dissenting
gress to “propose an amendment to the Constitution confer-
r
ing the power to levy an income tax upon the national
government without apportionment.” Ibid.
Shortly after the President delivered his message, Senator
Norris Brown of Nebraska proposed an income-tax amend-
ment providing: “The Congress shall have power to lay and
collect direct taxes on incomes without apportionment
among the several States according to popu lati on. ” 44
Cong. Rec. 3377 (1909). The proposed amendment's narrow
focus on an income tax was signifcant. After all, a constitu-
tional amendment could have easily eliminated Pollock's ob-
stacle to income taxation by removing the Constitution's
direct-tax provisions wholesale.
8
A few weeks later, the proposed amendment emerged from
Committee in its modern form. It is not clear how the origi-
nal proposal's reference to “direct taxes” was removed, or
how the phrase “from whatever source derived” was added.
See E. Jensen, The Taxing Power, the Sixteenth Amend-
ment, and the Meaning of “Incomes,” 33 Ariz. St. L. J. 1057,
1116–1117 (2001). The Amendment was passed by Congress
on July 12, 1909. See 44 Cong. Rec. 4440. And, the Secre-
tary of State certifed that the Amendment had been ratifed
by the States on February 25, 1913. 37 Stat. 1785.
B
With a full understanding of the context against which the
Sixteenth Amendment was ratifed, two conclusions become
clear. First, because the Amendment abolished Pollock's
8
In fact, that possibility was suggested on the Senate foor as soon as
the proposed amendment was read. 44 Cong. Rec. 3377 (“[I]f the Senator
from Nebraska will change his amendment to the Constitution so as to
strike out” all references to direct taxes, “he will accomplish all that his
amendment proposes to accomplish and not make a constitutional amend-
ment for the enacting of a single act of legislation”). But, Senator Brown
responded that his “purpose [was] to confne it to income taxes alone.”
Ibid.
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rule that an income tax must be classifed as direct or indi-
rec
t based on whether a tax on the source of that income
would be direct or indirect, the Amendment created a consti-
tutional distinction between income and its source. Second,
because Sixteenth Amendment “income” must be distin-
guished from its source, the Amendment includes a realiza-
tion requirement.
1
I return, fnally, to the text of the Sixteenth Amendment:
“The Congress shall have power to lay and collect taxes on
incomes, from whatever source derived, without apportion-
ment among the several States, and without regard to any
census or enumeration.” Against the background of Pol-
lock, the “power to lay and collect taxes on incomes, from
whatever source derived, without apportionment” under the
Sixteenth Amendment has an obvious and narrow meaning.
The only thing the Amendment changed about the Constitu-
tion was to abolish Pollock's rule that an income tax is a
direct tax if a tax on the source of the income would be a
direct tax. The Sixteenth Amendment left everything else
in place, including the federalism principles bound up in the
division between direct and indirect taxes.
The Court was frst asked to interpret the Sixteenth
Amendment in Brushaber v. Union Pacifc R. Co., 240 U. S.
1. A taxpayer raised an exhaustive set of “twenty-one con-
stitutional objections” to the frst income tax under the
Sixteenth Amendment. Id., at 10. Recognizing that the
text of the Amendment could not be understood in a vacuum,
the Court began with the text of the original taxing provisions
and the history of the disputes over direct taxes from Hylton's
Case to Pollock. 240 U. S., at 12–17. I can little improve
on Brushaber's explanation of the Sixteenth Amendment.
“[T]he whole purpose of the Amendment was to relieve all
income taxes . . . from apportionment [based on] a consider-
ation of the source whence the income was derived.” Id., at
18. Pollock stood for the rule that “whether a tax on in-
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come [is] direct” must be determined based upon a consider-
ati
on of “the property from which the income [is] derived.”
240 U. S., at 18. It was by “the rule applied in the Pollock
Case . . . alone” that income “taxes were removed from the
great class of [indirect taxes] and were placed under the . . .
direct class.” Id., at 19. The Amendment did nothing more
than remove that rule. The result was “the prevention of
the resort to the sources from which a taxed income was
derived in order to . . . place [an income tax] in the class of
direct taxes.” Ibid. But, other than that change, the
Amendment “was drawn with the object of maintaining the
limitations of the Constitution,” including Pollock's holding
that direct taxes included “taxes levied directly on personal
property because of its ownership.” 240 U. S., at 19.
The Sixteenth Amendment thus facilitated an income tax
by creating a new constitutional distinction between “in-
come” and its “source.” Under the Amendment, “from
whatever source” income is “derived,” a tax on it is indirect
and therefore not subject to the rule of apportionment.
But, as to taxes on the sources of income, the restrictions
imposed by the division between direct and indirect taxes
continued to apply with full force. And, taxes on property
continued to be classifed as direct taxes.
2
Because the Sixteenth Amendment requires a way to dis-
tinguish between income and source, it includes a realization
requirement. The text of the Amendment incorporates such
a requirement, and the concept of realization was well under-
stood at the time of ratifcation. The Constitution thus lim-
its unapportioned income taxes to taxes on realized income.
The word “income” in the Sixteenth Amendment must be
interpreted in light of the Amendment's distinction between
income and source. As the Court appreciated in Eisner v.
Macomber, failure to understand “income” in this way leads
to an interpretation of the Sixteenth Amendment that mis-
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Thomas, J., dissenting
takenly displaces aspects of the original taxing provisions
that
the Amendment left in place: “In order, therefore, that
the clauses cited from Article I of the Constitution may have
proper force and effect, save only as modifed by the Amend-
ment, and that the latter also may have proper effect, it be-
comes essential to distinguish between what is and what is
not `income.' ” 252 U. S., at 206.
Without an understanding of “income” that distinguishes
it from “source,” the Sixteenth Amendment undermines the
restriction imposed by the Direct Tax Clause. The Govern-
ment asserts that the Sixteenth Amendment uses “ `income'
. . . to refer to all economic gains.” Brief for United States
14 (some internal quotation marks omitted). That under-
standing of “income” would allow taxes on real and personal
property without apportionment. To be sure, most of the
Government's arguments focus on “taxes on individuals' pro
rata shares of undistributed corporate earnings.” Id., at 13.
But, the Government is not shy about the fact that its defni-
tion of income includes things such as “increase in the value
of a corporation's capital assets,” “increase in the value of
unsold property,” and “appreciation in the value of securi-
ties.” Id., at 16 (alterations and internal quotation marks
omitted). Those increases are “income” in a purely eco-
nomic sense, but not in a sense that meaningfully distin-
guishes between “income” and the “source” from which it is
“derived.” A tax on each, whether it be an increase in
assets, unsold property, or securities, would be a tax on the
value of real estate or property, and should therefore require
apportionment under the Direct Tax Clause.
The text of the Sixteenth Amendment points to the con-
cept of realization, as the Court explained that concept in
Macomber. The Amendment is clear that the word “in-
come” refers to something that is “derived.” Dictionaries
at the time of ratifcation defned “derive” as “[t]o receive,
as from a source or origin” and “to draw.” Webster's New
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sense of “derived” maps neatly onto Macomber's realization-
focused
defnition of “income” as being “received or drawn
by the recipient (the taxpayer) for his separate use.” 252
U. S., at 207.
In fact, the idea of realization as the distinction between
income and source long predates both Macomber and the
Sixteenth Amendment. As the Government acknowledges,
“the concept” of “realization . . . was well established when
the Amendment was adopted.” Brief for United States 15.
The term “realized” appeared in several Civil War income
tax provisions. Id., at 16 (citing § 116, 13 Stat. 281; § 7, 16
Stat. 257–258). And, contemporaneous “[d]ictionaries de-
fned `realize' as `to convert any kind of property into
money.' ” Brief for United States 15–16 (quoting Webster's
1778, and citing Black's Law Dictionary 993 (2d ed. 1910);
alteration omitted). The Government argues that the deci-
sion to omit the often-used word “realized” from the Six-
teenth Amendment is signifcant evidence that the Amend-
ment does not require realization. See Brief for United
States 16. But, the choice to instead use the near-synonym
“derived” merely refects the repeated use of the word “de-
rive” to describe the relationship of income to its source in
Pollock, to which the Sixteenth Amendment was a direct
response. See 158 U. S., at 618, 629, 635.
The metaphor that the Court famously used in Macomber
also shows the deep roots of the realization concept. To il-
lustrate the “fundamental relation of `capital' to `income,' ”
Macomber compared “the former . . . to the tree or the land,
[and] the latter to the fruit or crop.” 252 U. S., at 206. That
understanding of income as being something “severed from”
its source predated the Sixteenth Amendment. In a well-
cited case from 1878, the Georgia Supreme Court relied on a
tree-and-fruit analogy in a tax case to explain the difference
between income and property: “The fact is, property is a
tree; income is the fruit.” Waring v. Mayor and Aldermen
of Savannah, 60 Ga. 93, 100 (1878); see also Black's Law Dic-
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tionary, at 612 (defning “income” (citing Waring, 60 Ga.,
at
99)).
The text of the Sixteenth Amendment, read against the
background of its adoption, confrms that the “incomes” that
the Sixteenth Amendment allows Congress to tax without
apportionment are only realized incomes. We granted cer-
tiorari in this case to answer whether Congress may “tax
unrealized sums without apportionment among the states.”
Pet. for Cert. i. As the Sixteenth Amendment makes clear,
the answer to that question is a resounding “no.” The Court
errs today by failing to correct the Ninth Circuit's contrary
understanding.
***
It is imperative to give the original taxing provisions in
Article I their proper effect. Those provisions refect a deli-
cate compromise under which the founding generation took
the great risk of ceding much of the States' exclusive tax-
ing authority to the Federal Government. Supra, at 625–
631. Without that compromise, the Constitution could eas-
ily have been rejected. To be sure, the States slightly
altered the original agreement by ratifying the Sixteenth
Amendment. But, a constitutional amendment does not af-
fect our duty of fdelity to the aspects of the original agree-
ment that remain in place—including the Direct Tax Clause.
If a written constitution is to mean anything, the compro-
mises it records must bind us until we amend them.
II
The Court strains to uphold the Mandatory Repatriation
Tax without addressing whether the Sixteenth Amendment
includes a realization requirement, the question we agreed
to answer in this case. The majority starts by surveying a
scattered sampling of precedents—mostly about tax avoid-
ance—to invent an “attribution” doctrine that sustains the
MRT. The majority also relies on “longstanding congres-
sional practice” to conclude that the Moores' claim fails be-
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cause they cannot distinguish the MRT from similar taxes
i
mposed by Congress in the past, which the Moores concede
are constitutional. Neither point can withstand scrutiny.
A
To avoid the question whether the Sixteenth Amendment
requires realization, the majority reframes the case as being
about whether Congress may attribute an entity's realized
income to shareholders or partners. Ante, at 584. Accord-
ing to the majority, our precedents establish a “clear rule”
that the Sixteenth Amendment empowers Congress to
choose whether “to tax [an] entity on its income” or instead
“tax the entity's shareholders or partners on their share of
the entity's undistributed income.” Ante, at 593. Applying
this rule, the Court concludes that the MRT permissibly
chooses to attribute undistributed income earned by foreign
corporations to their American shareholders. The Court
thus refuses to address the “Government's argument that
a gain need not be realized to constitute income under the
Constitution” because the foreign corporation has realized
the income. Ante, at 589, n. 3.
The majority's Sixteenth Amendment “attribution” doc-
trine is a new invention. The majority justifes its creation
by plucking superfcially supportive phrases from an eclectic
selection of tax cases. But, none of the cases supports the
proposition that the Sixteenth Amendment empowers Con-
gress to freely attribute income to any taxpayer it reason-
ably chooses.
The majority begins with Burk-Waggoner Oil Assn. v.
Hopkins, 269 U. S. 110 (1925), a case that it says “articulated
[the] fundamental principle” that “Congress could tax . . .
income as it ch[ooses],” either by taxing an entity or an indi-
vidual. Ante, at 585. But, Burk-Waggoner merely held that
Congress may tax a de facto corporation on its own income,
even if it is formally a partnership under state law. See
269 U. S., at 114 (“[N]othing in the Constitution precludes
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Congress from taxing as a corporation an association which,
a
lthough unincorporated, transacts its business as if it were
i ncor porated”). Tel l i ng ly, we have never cited Burk-
Waggoner for the proposition derived by the majority, but
instead for the proposition that federal statutes “designed to
tax income actually earned . . . are not to be frustrated by
state laws.” Commissioner v. Tower, 327 U. S. 280, 288
(1946) (citing 269 U. S., at 114); see also Lyeth v. Hoey, 305
U. S. 188, 194 (1938) (same); Hemphill v. Orloff, 277 U. S. 537,
550 (1928) (same). Burk-Waggoner thus shows that state
law may not be used as a means of evading federal taxes—
not that Congress may choose whether to attribute income
to entities or individuals.
The majority then cites Burnet v. Leininger, 285 U. S. 136
(1932), which it says “reiterated” that Congress can choose
to impose income-tax liability “ `upon [a] partnership di-
rectly' ” or “ `upon the individuals carrying on business in
partnership.' ” Ante, at 585–586 (quoting 285 U. S., at 142).
But, the majority quotes language that is part of a due proc-
ess holding, not an application of the Sixteenth Amendment.
Leininger involved a taxpayer's attempt to evade taxation
by assigning half of his share in a partnership's income to
his wife. Id., at 138. The taxpayer argued that assessing
income taxes against him based on “a partnership interest
owned by his wife” violated the Fifth Amendment's Due
Process Clause. Brief for Respondent in Burnet v. Lei-
ninger, O. T. 1931, No. 426, p. 24. The Court rejected the
argument, concluding that it did not violate due process to
“tax the distributive share of each partner” by ignoring the
taxpayer's attempt to divert his income to his wife. 285
U. S., at 142. The majority is clear that it offers no opinion
about due process questions. See ante, at 581, nn. 4, 6. Be-
cause Leininger is a due process case, it is unclear how it
supports the majority's Sixteenth Amendment attribution
doctrine.
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Thomas, J., dissenting
Next, the majority claims that the Court “reaffrmed that
Congress
may choose to tax either [a] partnership or [its]
partners” in Heiner v. Mellon, 304 U. S. 271 (1938), when it
rejected the argument by members of a partnership “that
Congress could not tax them on income that they did not and
could not personally receive.” Ante, at 586. But, Heiner is
a statutory interpretation case. Under the applicable stat-
ute, the taxpayers were subject to a tax on their “distribu-
tive share, whether distributed or not, of the net income of
the partnership.” § 218(a), 40 Stat. 1070. The taxpayers
argued only that “there was no distributive share” within
the meaning of the statute, because distribution was cur-
rently impossible under state law; they made no argument
about the scope of Congress's power. Brief for Respondents
in Heiner v. Mellon, O. T. 1937, No. 144 etc., p. 34. Heiner's
interpretation of the statutory phrase “distributive share”
cannot be understood as a holding about the scope of Con-
gress's supposed attribution power.
The majority completes its survey of “attribution” prece-
dents with Helvering v. National Grocery Co., 304 U. S. 282
(1938), which it says extended Heiner's attribution principle
from partnerships to corporations. Ante, at 586. But, Na-
tional Grocery demonstrates Congress's ability to legislate
against tax-avoidance schemes—not an ability to freely at-
tribute corporate income to shareholders. The majority
misleadingly describes National Grocery as involving “the
controlling shareholder of a corporation” being taxed “indi-
vidually . . . on the year's profts.” Ante, at 586 (internal
quotation marks omitted). In reality, the case involved a
tax paid by a corporation—owned 100% by one person—after
the corporation permitted profts to accumulate without dis-
tribution “ `for the purpose of preventing the imposition of
[a] surtax upon [the] sole stockholder.' ” 304 U. S., at 285.
In essence, the sole stockholder used the corporation as a
tax-free bank account to hold what was really his income.
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The Court concluded that Congress may legislate to prevent
“
the sole owner of [a] business” from “conducting it as a cor-
poration” to avoid the tax consequences that would attach if
the business had “been carried on as a partnership.” Id., at
288. The Court cited Heiner merely to explain those tax
consequences, not to support an attribution principle. Na-
tional Grocery is yet another tax-evasion case, not an appli-
cation of an attribution principle.
At most, the cases cited by the majority demonstrate that
Congress may attribute income to the entity or individual
who actually controlled it when necessary to defeat attempts
to evade tax liability. They do not suggest that Congress
may freely choose whether to impose an income tax on a
corporation or on its shareholders. The “clear rule” that the
majority relies on to sidestep the realization question is thus
a mirage. Ante, at 593.
B
The majority separately concludes that the Moores' claim
fails because they cannot distinguish the MRT from other
longstanding taxes that they concede are constitutional.
The majority sees no distinction between the MRT and older
taxes on partnerships, “S corporations,” and closely held for-
eign corporations under other parts of subpart F. Ante, at
592–597. But, the majority's insistence that the MRT is just
like other forms of pass-through taxation is not convincing.
First, the MRT's taxation of corporate shareholders is not
like pass-through taxation of partners. The Moores are cor-
rect that the Sixteenth Amendment allows Congress to tax
partners on partnership income because “partnerships hav[e]
no existence separate from their partners.” Brief for Peti-
tioners 51. A partner's share of partnership income is
therefore understood to be his own income. The majority
quibbles with the Moores' understanding of early-20th cen-
tury par tnersh ip law and points out that “ leg islatures
treated partnerships as separate entities in many contexts,”
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Thomas, J., dissenting
including for some tax purposes. Ante, at 593–594. But,
the
fact that a partnership can sometimes be treated as an
entity is beside the point. The signifcant fact is that part-
ners had long been considered to be subject to income taxes
without consideration of the partnership; longstanding taxes
based on that understanding are not implicated by the
Moores' challenge to the MRT.
Second, and for similar reasons, the MRT's taxation of cor-
porate shareholders is not like pass-through taxation of
shareholders of “S corporations.” An S corporation is a cor-
poration that does not have more than 100 shareholders, does
not have any shareholder who is not an individual or who is
a nonresident alien, does not have more than one class of
stock, and which elects to be treated as an S corporation. 26
U. S. C. §§ 1361(a)(1), (b)(1). These eligibility requirements
make it clear that pass-through taxation of S corporations is
merely an extension of the pass-through taxation of partner-
ships. Indeed, for most tax purposes, S corporations are
equivalent to partnerships, not to corporations. “Tax prac-
titioners often say that an S corporation is taxed like a part-
nership.” CCH S Corp. Guide ¶510, p. 505 (2013); see also
West's Tax Law Dictionary (2024) (defning “S Corporation”
as “Corporation which elects S status and receives tax treat-
ment similar to a partnership”). Taxing S corporati on
shareholders on corporate income is constitutional for the
same reasons as taxing partners on partnership income. To
the majority, “S corporations are another example of Con-
gress's authority to either tax the corporation itself on corpo-
rate income or attribute the undistributed income to the
shareholders and tax the shareholders.” Ante, at 595. But,
it does not make sense to look to S corporations for conclu-
sions about the pass-through taxation of corporate share-
holders generally.
Finally, the MRT is unlike other taxes on shareholders of
closely held foreign corporations. The MRT “differs from
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other provisions of Subpart F”—the portion of the Internal
Re
venue Code dealing with controlled foreign corpora-
tions—because the MRT does not focus on “the corporation's
receipt of investment earnings while subject to the share-
holders' control.” Brief for Petitioners 44–45. Subpart F
“aligns the corporation's earning of the money being taxed
with the shareholder's control in the same year.” Reply
Brief 23. But, “[t]he MRT by its terms takes no account of
whether a shareholder had any interest or control when the
corporation made the earnings that it attributes to her.”
Ibid. In fact, the MRT “tags a shareholder with taxable
`income' even if ” he purchased shares “long after the corpo-
ration earned the sums being taxed,” and it imposes no liabil-
ity on taxpayers who owned shares for years of retained
earnings but sold them before the MRT's trigger date.
Brief for Petitioners 45. Subpart F includes some minimal
requirements to ensure that taxable “income” belongs to the
shareholder in some way; the MRT abandons that effort
entirely.
The majority concludes that “the MRT . . . has the same
essential features as subpart F.” Ante, at 596. But, unlike
the rest of subpart F, the MRT has no connection at all to
any “recognition event” or “constructive receipt of income,”
and it offers no “rational basis for Congress to attribute in-
come to a taxpayer.” S. McElroy, The Mandatory Repatria-
tion Tax Is Unconstitutional, 36 Yale J. Reg. Bull. 69, 80–81
(2018). The MRT turns solely on the ownership of stock on
a certain date. That is a signifcant difference between the
MRT and the rest of subpart F, and one with constitutional
implications.
The fact that the MRT has novel features does not mean
that it is unconstitutional. But, the MRT is undeniably
novel when compared to older income taxes, and many of
those differences are constitutionally relevant. Because the
MRT is imposed merely based on ownership of shares in a
corporation, it does not operate as a tax on income.
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Thomas, J., dissenting
C
The
majority is not ashamed to lay bare the consequential-
ist heart of its opinion. Because it wrongly concludes that
the Moores' constitutional argument would invalidate not
only the MRT but also other longstanding taxes, the major-
ity frets that the Moores would “deprive the U. S. Govern-
ment and the American people of trillions in lost tax reve-
nue” and “require Congress to either drastically cut critical
national programs or signifcantly increase [other] taxes.”
Ante, at 597. “The Constitution does not require that fscal
calamity,” the majority proclaims. Ibid. I agree. But, if
Congress invites calamity by building the tax base on consti-
tutional quicksand, “[t]he judicial Power” afforded to this
Court does not include the power to fashion an emergency
escape. Art. III, § 1, cl. 1.
Even as the majority admits to reasoning from fscal conse-
quences, it apparently believes that a generous application of
dicta will guard against unconstitutional taxes in the future.
The majority's analysis begins with a list of non-existent
taxes that the Court does not today bless, including a wealth
tax. Ante, at 584–585, n. 2. And, it concludes by offering a
narrow interpretation of its own holding, hinting at limiting
doctrines, prejudging future taxes, cataloguing the Gov-
ernment's concessions, and reserving other questions “for
another day.” Ante, at 598–600. Sensing that upholding
the MRT cedes additional ground to Congress, the majority
arms itself with dicta to tell Congress “no” in the future.
But, if the Court is not willing to uphold limitations on the
taxing power in expensive cases, cheap dicta will make no
difference.
III
The Court today upholds the MRT, but not because it en-
dorses the Ninth Circuit's erroneous view that “realization
of income is not a constitutional requirement.” 36 F. 4th, at
936. The majority acknowledges that the Sixteenth Amend-
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ment draws a distinction between income and its source.
An
te, at 583. And, it does not dispute that realization is
what distinguishes income from property. Ante, at 584.
Those premises are suffcient to establish that realization is
a constitutional requirement. Sixteenth Amendment “in-
come” is only realized income. We should not have hesi-
tated to say so in this case. I respectfully dissent.
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Reporter’s Note
The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:
p. 609, line 17: “the” is inserted before “liquid”
p. 610, line 3 from bottom: “realized” is inserted before “taxable”
p. 636, line 10: “on” is replaced with “upon”