Washington, D.C. – Today, Main Street Alliance (MSA), Small Business Majority (SBM), and Anne Zimmerman (business owner, and co-chair of Small Business For America’s Future) submitted a brief to the Supreme Court in Moore v. United States urging the Court to reject radical arguments that threaten to upend our entire tax system. The coalition is represented by Democracy Forward.
In Moore, plaintiffs–backed by many far-right groups that enjoy close ties to SCOTUS justices–are challenging the constitutionality of the Mandatory Repatriation Tax (MRT), a one-time transition tax included in 2017 tax legislation designed to prevent accumulated earnings from going untaxed permanently. The plaintiffs’ legal theories in Moore are unprecedented and unfounded. Their central argument is that the 16th Amendment of the U.S. Constitution does not authorize Congress to tax unrealized gains. But as various tax experts have explained, the 16th Amendment clearly authorizes such tax regimes. And Congress has long-relied on that authority to tax corporate income that has not been distributed to owners and investors.
What’s more, small businesses, the heart of the American economy, will bear the brunt of the burden if this extreme attack on our tax system succeeds. Small businesses are critical to our country’s economy. The vast majority—99.9 percent—of businesses in the United States are small. Small businesses also employ nearly half of the nation’s workers. Likewise, small businesses have created the majority of new jobs in the United States since 1995.
If the court recognizes the plaintiffs’ argument, it would create years of tax uncertainty for small businesses, harming their ability to compete. Small businesses, unlike the largest corporations, don’t have the resources to follow complex tax law developments.
As the brief notes, “predictable tax burdens allow small businesses to confidently plan and prepare for the future.”
In the absence of predictability, small businesses may face a range of negative outcomes, from forgoing critical investments to outright failure. The potential harms of this case are why small businesses—along with a broad, ideologically diverse coalition—have come out in support of the MRT’s constitutionality. From former House Speaker Paul Ryan and the American Enterprise Institute, to 16 states and the District of Columbia, many warn that an upending of the MRT will pose untold consequences across the economy.