Philanthropy Roundtable argued in an amicus brief filed on September 6, 2023 before the U.S. Supreme Court in Moore v. United States that the court should overrule the decision by the Ninth Circuit Court of Appeals to permit taxation of unrealized gains. As we write in the brief, this case “concerns Philanthropy Roundtable because the American philanthropic movement strengthens our free society, but its effectiveness is highly dependent on the nature of the tax code. If the Mandatory Repatriation Tax is upheld, then it could open the door to a variety of taxes that are dangerous to effective philanthropy.”
The Roundtable’s brief explains how America’s rich tradition of charitable giving is one that depends on a fair and predictable tax code. As we’ve argued before in The Hill and our policy brief on the topic, the Ninth Circuit decision fundamentally changes the limits of the 16th Amendment and imperils a fair and predictable tax code.
The framers of the Constitution and the 16th Amendment believed the power to tax should be limited and predictable. They also believed the private sphere, including philanthropy, is just as important as the public sphere. A broad and unfettered power to tax can undoubtedly have a negative impact on philanthropy.
That impact could be widespread. Philanthropy is a vital part of American society. It helps to improve the lives of millions of people, from providing food and shelter for the homeless to funding medical research and curing diseases. Our tax code should facilitate giving, not discourage it.
Beyond this, the tax referred to in this case, known as the Mandatory Repatriation Tax (MRT), could open the door to other taxes that would also discourage philanthropy. For example, some proponents of wealth taxes have suggested these taxes should also apply to private charitable foundations. This would be a significant blow to the altruistic effects of private charities, as it would make it more difficult for these charities to raise money.
The framers of the Constitution intentionally created a system that makes it difficult to pass destructive taxes, such as the MRT or a wealth tax. They understood taxes are both necessary and potentially harmful. By making certain types of taxes more difficult to pass, the framers hoped to protect the liberties of the people, including the liberty to give to private charities.
To protect philanthropy and uphold the 16th Amendment, the Supreme Court should overrule the Ninth Circuit decision.