Supreme Court Upholds 2017 Tax On Foreign Profits For US Businesses

Zinger Key Points
  • Supreme Court upholds 2017 tax on U.S. firms' foreign profits, 7-2 decision.
  • Tax aims to generate $340 billion over ten years from multinational companies.

The U.S. Supreme Court has preserved a 2017 tax on American-owned businesses’ foreign profits.

The justices voted 7-2 in making their decision, arguing that Congress has the constitutional power to tax people and businesses on their share of undistributed company income, Bloomberg reported.

The case was being closely monitored because of possible implications for Democratic proposals to impose a wealth tax.

"Those are potential issues for another day, and we do not address or resolve any of those issues here," Justice Brett Kavanaugh wrote for the court, according to Bloomberg.

He added that "Congress has long taxed shareholders of an entity on the entity's undistributed income, and it did the same" with the 2017 tax.

Also read: US Supreme Court Rejects Bid To Restrict Use Of Common Abortion Drug

Justices Clarence Thomas and Neil Gorsuch dissented.

The measure, known as the mandatory repatriation tax, was established to counter other parts of a Republican-backed tax cut passed during the Trump administration. The government has estimated that the tax would bring in $340 billion over 10 years, much of it from multinational companies such as Apple Inc. AAPL and Pfizer PFE.

As it enters the final week of its term, the Supreme Court is set to rule on a roster of blockbuster decisions, including ones on federal criminal charges against former President Donald Trump, abortion rights and the Second Amendment, the New York Times reported.

The court has already decided that Trump can stay on the ballot, that an abortion pill will remain widely available, and that a regulation banning devices making guns more lethal was unlawful.

By late June or early July, the justices will issue decisions in about a dozen other major cases, including not only additional ones affecting Trump, but also ones on the opioid crisis, homelessness, social media and the power of administrative agencies.

The next set of rulings is set to come down starting at 10 a.m. on Friday.

Read now: US Supreme Court To Weigh Starbucks Challenge Over Fired Baristas

Photo: Shutterstock

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