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															SUPREME COURT OF THE UNITED STATES

															_________________

															No. 22–800

															_________________

															CHARLES G. MOORE, et ux., PETITIONERS v. UNITED STATES

															on writ of certiorari to the united states
court of appeals for the ninth circuit

															[June 20, 2024]

															Justice Kavanaugh delivered the opinion of the
Court.

															For tax purposes, Congress has long treated some
corporations and partnerships as pass-throughs: Congress does not
tax the entity on its income, but instead attributes the
undistributed 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 to
their American shareholders and then taxes those shareholders 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
shareholders 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 business entities such as corporations and partnerships in
one of two ways.

															First, some entities such as S corporations and
partnerships 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 file 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 shareholders
typically pay taxes either when the corporation distributes 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.

															Congress has devised more nuanced rules for
foreign entities such as foreign corporations. For legal and
practical reasons, Congress generally does not directly tax foreign
corporations, including American-controlled foreign corporations,
on the income that they earn outside of the United States. Instead,
Congress has imposed some taxes on income of those corporations on
a pass-through basis.

															Most notably, starting in 1962, in what is known
as subpart 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 shareholders on that income.
26 U. S. C. §§951–952. But subpart F applies only to a
small portion of the foreign corporation’s income, mostly passive
income.

															In 2017, Congress passed and President Trump
signed the Tax Cuts and Jobs Act. 131Stat. 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 investments 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 foreign
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 corporations had earned and accumulated
trillions of dollars in income 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.

															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 attributed
the long-accumulated and undistributed income of
American-controlled foreign corporations to American shareholders,
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, KisanKraft had not
distributed that income to its American 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
investment 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
reasons. 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 KisanKraft stock.
Second, they contended that the MRT violated 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 affirmed. The
Court of Appeals held that the MRT constitutes a tax on income
within the meaning of the Constitution because “KisanKraft earned
significant 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
certiorari. 599 U. S. ___ (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 Confederation in effect from 1781 to 1789, the Federal
Government 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 important national priorities—including the war against
the British. 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
Constitutional Convention that convened in Philadelphia in the
summer of 1787. The Federalist No. 30 (A. Hamilton). The Framers
responded to the revenue problem by granting Congress an expansive
taxing power.

															Article I of the Constitution affords Congress
broad “Power To lay and collect Taxes, Duties, Imposts and
Excises.” Art. I, §8, cl. 1. That power includes “ ‘two great
classes of’ ” taxes—direct taxes and indirect taxes. Brushaber v. Union Pacific R. Co. , 240 U.S.
1 , 13 (1916).

															Generally speaking, direct taxes are
those taxes imposed on persons or property. See National
Federation of Independent 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 five percent of
the population would pay five 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
five 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 politically unpalatable result has made direct taxes difficult
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 12Stat. 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 income taxes. U. S. Const., Art. I, §8, cl. 1;
Amdt. 16. Under 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 permitted 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 first unapportioned
income tax. 12Stat. 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 significant
confusion and controversy throughout the United States.

															Congress and the States responded to Pollock by approving a new constitutional amendment.
Ratified in 1913, the Sixteenth Amendment rejected Pollock ’s
conflation of (i) income from property and (ii) the property
itself. The Amendment provides: “The Congress shall have power to
lay and collect taxes on incomes, from whatever source
derived , 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
confirmed 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. Brushaber , 240 U. S., at 15, 18. Meanwhile, property
taxes remain direct taxes that must be apportioned. See Helvering v. Independent Life Ins. Co. , 292 U.S.
371 , 378–379 (1934).

															III

															With that background, we turn to the 2017
Mandatory Repatriation 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 investment, 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 addresses today is whether 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. This Court’s longstanding precedents,
reflected in and reinforced by Congress’s longstanding practice,
establish that the answer is yes.[ 2 ]

															A

															Congress sometimes chooses to tax a business
entity itself on the income that the entity earns. Alternatively,
Congress sometimes elects to treat an entity as a
pass-through—attributing the entity’s undistributed income to the
shareholders 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
partnership’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
prevailing 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 significance 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 partnership 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 partners. Id. , at 142. The
Court again held that “Congress, having the authority to tax the
net income of partnerships, could impose the liability upon the
partnership directly,” or it could impose tax liability “upon the
individuals carrying on business in partnership.” Ibid. (quotation marks omitted).

															Next, in 1938 in Heiner v. Mellon ,
the Court again addressed a situation closely akin to the Moores’
case here—a tax on partners for the undistributed income of their
partnership. 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 relevant federal tax law, the individual
partners owed taxes on the partnership’s income. The partners
argued that Congress 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 reaffirmed
that Congress may choose to tax either the partnership 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 profits.” 304 U.S.
282 , 288. Citing Heiner v. Mellon , the Court
stated that Congress may tax shareholders of the corporation on the
corporation’s undistributed income, in much the same way that
Congress can tax the partners of a partnership 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. Indeed, since then, it has gone without serious question
in both Congress and the federal courts that Congress can attribute
the undistributed income of an entity to the entity’s shareholders
or partners, and tax the shareholders or partners 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 shareholders, and then taxing the
American shareholders on their pro rata shares of the income.
As the Second Circuit concluded in a leading case upholding subpart
F: The constitutional 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 “Supreme 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 Congress’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 operation 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 Assn. v. Hopkins , Heiner v. Mellon , and Helvering v. National
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 attribute the income of an entity to the
entity’s shareholders or partners. Rather, the Court in Eisner v. Macomber addressed a situation where a
corporation created and distributed 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 ownership. Id. , at 210–211. So the actual
value of the shareholders’ 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 reasoned that there was no change in the value of
the shareholders’ 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
shareholders. Ibid. And the Court further stated that income
requires 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 ]

															Separate from that analysis, the Court went on
to say in dicta that “what is called the stockholder’s share in the
accumulated profits 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 double
taxation—taxing both the corporation and its shareholders on the
corporation’s undistributed income. See, e.g. , Brief for
American College of Tax Counsel as Amicus Curiae 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. Macomber to mean that a tax attributing an
entity’s undistributed 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 definitive 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
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
congressional practice reflects and reinforces this Court’s
precedents upholding those kinds of taxes.

															In 1864, for example, Congress passed and
President Lincoln signed an income-tax law that taxed individuals
on “the gains and profits of all companies, whether incorporated or
partnership,” in which they were shareholders or partners. 13Stat.
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
ratified, Congress enacted a new income tax on shareholders for
their share of the incomes of corporations formed or used to evade
taxes. 38Stat. 166. That 1913 law also taxed partners on each
partner’s “share of the profits 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 without regard to whether that amount is
actually distributed to him.” United States v. Basye , 410 U.S.
441 , 453 (1973).

															As new kinds of corporate entities arose,
Congress employed a similar approach. For example, in the 1918
Revenue 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.” 40Stat. 1070.

															And since 1958, the Internal Revenue Code has
also taxed the shareholders of S corporations in the same way as
partnerships—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 corporations 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 income of those entities. For example, in 1937, Congress
taxed American shareholders of foreign personal holding companies
on those companies’ undistributed income. 50Stat. 822.

															And in 1962, Congress enacted subpart F, which
remains in place to this day. 76Stat. 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
F. 2d, at 202–203, and n. 5 (the constitutional challenge to
subpart F “borders on the frivolous” in light of Heiner v. Mellon ); Estate of Whitlock , 494 F. 2d, at 1301.

															In short, before and after ratification 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 reflects
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 radius 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 specific: The Moores explicitly concede
that partnership taxes, S-corporation taxes, and subpart F taxes
are income taxes that are constitutional and need not be
apportioned. 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.

															Instead, the Moores seek to differentiate the
MRT from all 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 longstanding 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 distinguishable 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 income 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 established 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
undistributed 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 ratified in 1913, partnerships
were not seen as legal entities separate from the partners. But
that assertion is incorrect. When the Sixteenth Amendment was
ratified, the courts, Congress, and state legislatures treated
partnerships as separate entities in many 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
Central L. J. 343 (1903) (citing many additional
ratification-era cases); see also H. Black, Law of Income Taxation
Under Federal and State Laws 100 (1913) (The “undivided earnings of
a partnership . . . properly constitute income
of the firm but not of the individual partners”); 30Stat. 545,
547–548 (1898) (federal bankruptcy law that treated partnerships as
separate entities); F. Burdick, Law of Partnership, ch. 3, §1, pp.
85–86 (rev. 2d ed. 1906) (It “is becoming more and more customary
for legislation and judicial decisions to treat a partnership as an
entity”).

															During the time period around ratification of
the Sixteenth Amendment, moreover, numerous States imposed taxes
directly 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 during
World War I, Congress enacted the Revenue Act of 1917, which also
imposed a tax directly on partnerships. 40Stat. 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
partnerships were not historically seen as separate taxable
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 demonstrate
that partnerships were (and are) flexible entities that can receive
flexible legal treatment. Those cases are consistent 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, or upon the ‘individuals carrying on
business in partnership.’ ” Burnet v. Leininger , 285 U.S.
136 , 142 (1932) (citation omitted). As with other business
entities, Congress may choose whether to tax (i) the entity or
(ii) its shareholders 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
cannot explain S-corporation taxation; after all, consent to
taxation 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 shareholder 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 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.” Brief
for Petitioners 47.

															The Moores have not pointed to any use of the
phrase “constructive 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 not
accord with their proposed constitutional rule. See Brief 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
subpart F and other pass-through taxes. For example, the Moores
claim that constructive realization turns on a sufficient 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 control 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 subpart 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 if we were to accept the Moores’
constructive-realization 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 “constructive realization” theory—and
the Moores explicitly concede 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 unconstitutional. See, e.g. , 26
U. S. C. §305(c) (deemed stock distributions); §§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 instruments); §§1361–1379 (S
corporations); §§2501–2524 (gift 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
significantly increase taxes on the remaining sources available to
it—including, of course, on ordinary Americans. The Constitution
does not require that fiscal calamity.[ 7 ]

															*  *  *

															The MRT attributes the undistributed income 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 partnerships, 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 ]

															To be clear, as we indicated earlier, the Due
Process Clause proscribes arbitrary attribution. See supra ,
at 14, n. 4. And nothing in this opinion should be read to
authorize any hypothetical congressional effort to tax both an
entity and its shareholders or partners on the same undistributed
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 considered 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 economic gain ‘between two points of
time’ ”); Tr. of Oral Arg. 69, 127–128.

															And the Government further acknowledges that the
constitutionality of a hypothetical unapportioned tax on
appreciation may depend on, among other things, whether realization
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 disagreement 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 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 affirm the judgment of the U. S.
Court of Appeals for the Ninth Circuit.

															It is so ordered. Notes 1 The Act also imposed a
similar pass-through tax going forward. §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. 2 As discussed below, infra , at 22–24, our analysis today does not address the
distinct issues that would be raised by (i) an attempt by Congress
to tax both the entity and the shareholders or partners on the
entity’s undistributed income; (ii) taxes on holdings, wealth, or
net worth; or (iii) taxes on appreciation. 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 unrealized) 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. Griffiths , 318 U.S.
371 (1943), and Commissioner v. Glenshaw Glass
Co. , 348 U.S.
426 (1955). Because the MRT taxes realized 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 infra , at 22–24. 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 7. But in 1913, the Sixteenth
Amendment then overruled that aspect of Pollock . 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 “definition 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 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
undistributed 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 , at 1 (opinion of Barrett, J.). We do not agree that
the Court’s precedents 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 taxing 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). SUPREME COURT OF THE UNITED STATES

															_________________

															No. 22–800

															_________________

															CHARLES G. MOORE, et ux., PETITIONERS v. UNITED STATES

															on writ of certiorari to the united states
court of appeals for the ninth circuit

															[June 20, 2024]

															Justice Jackson, concurring.

															Our Constitution grants Congress “plenary power”
over taxation. Brushaber v. Union Pacific R. Co. , 240 U.S.
1 , 13 (1916). The text supplies only two relevant conditions:
Direct 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 controlling. See, e . g ., Pacific 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, unlimited 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 profits 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 federal
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 constitutional amendment. The
Sixteenth Amendment restored to Congress the power to tax “incomes,
from whatever source derived, without apportionment.”

															Against that stark backdrop, the Court wisely
takes a restrained approach today. Petitioners allege that the
Mandatory Repatriation Tax (MRT) exceeded Congress’s power by
taxing shareholders on the undistributed income of a corporation;
such a tax, petitioners argue, is really a direct tax requiring
apportionment. The majority opinion rightly rejects 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 22.
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 Congress can tax income only if it is actually received or
“realized.” 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 overrule Pollock ).
Moreover, both before and after the Sixteenth Amendment was
adopted, the term “income” was widely recognized as flexible 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
dividends, 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. Griffiths , 318 U.S.
371 , 373 (1943). Over the two decades that followed our
pronouncement, we “limited” Macomber ’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 Macomber 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 Cottage Savings Assn. v. Commissioner , 499 U.S.
554 , 559 (1991) (explaining that, properly understood, “the
concept of realization is ‘founded on administrative
convenience,’ ” compared to the “ ‘cumbersome’ ”
process of “valuing assets on an annual basis to determine . . .
appreciat[ion]”). In the lower courts too, Macomber ’s
definition 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
confirm that the tax was a direct tax before requiring
apportionment. The Constitution does not exhaustively define 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 apportionment, 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 upheld uniform taxes as
excises, even when predicated on something that, if taxed on its
own, might require apportionment or even be nontaxable. See Flint v. Stone Tracy Co. , 220
U.S. 107 , 150–152, 165 (1911). In this case, the Government
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 future Presidents will sign, taxes that outrage one group
or another—taxes that strike some as demanding too much, others as
asking too little. There may even be impositions that, as a matter
of policy, all can agree are wrongheaded. However, 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 government.” Pollock , 158
U. S., at 680 (Harlan, J., dissenting).

															With that understanding, I join the Court’s
opinion in full. Notes 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 specific facts”); United States v. James , 333 F.2d 748, 752 (CA9 1964)
(“[I]nsofar as [ Macomber ] purported to offer a comprehensive
definition 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 [ Macomber ’s] attempt at an
all-inclusive definition 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, increased value. See Eisner v. Macomber , 252 U.S.
189 , 211 (1920) (emphasizing 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. SUPREME COURT OF THE UNITED STATES

															_________________

															No. 22–800

															_________________

															CHARLES G. MOORE, et ux., PETITIONERS v. UNITED STATES

															on writ of certiorari to the united states
court of appeals for the ninth circuit

															[June 20, 2024]

															Justice Barrett, with whom Justice Alito
joins, concurring 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 first
question: Shareholders receive income when they sell their shares
or when a corporation distributes profits back to its investors by
declaring 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 8. 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 specific tax
imposed upon the American shareholders of a closely held foreign
corporation. A different tax—for example, a tax on shareholders 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, §2,
cl. 3; §9, cl. 4.[ 1 ]
Apportionment 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 property taxation primarily to the States. See post , at 7–12 (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 Amendment overruled Pollock ’s second holding, stating that “Congress shall have
power to lay and collect taxes on incomes, from whatever source
derived, without apportionment.” But it did not overrule Pollock ’s first holding that taxes on personal property are
direct taxes. See Brushaber v. Union Pacific
R. Co. , 240 U.S.
1 , 19 (1916); National Federation of Independent
Business v. Sebelius , 567 U.S.
519 , 571 (2012).

															As the text of the Sixteenth Amendment
indicates, income is financial 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 Dictionary 1089
(1909) (Webster’s) (“income” is “[t]hat gain or recurrent benefit
(usually measured in money) which proceeds from labor, business, or
property”). To capture the distinction between property and income,
we have described property as the “seed” and income as the “fruit
that it will yield.” 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 23–25 (Thomas, J., dissenting). While the
Government stresses that the Amendment did not include a
“realization” requirement, Brief for United States 15–16, “realize”
and “derive” have long referred to the same concept. Compare
Webster’s 1778 (“realize” means to “convert an intangible right or
property into real (tangible) property”; to “convert any kind of
property (considered as fluctuating or uncertain in value) into
money”), with id ., at 601 (“derivation” is the “[a]ct of
receiving anything from a source, as profits 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 8; Cullinan v. Walker , 262 U.S.
134 , 138 (1923). And we have also used the term “realized” in cases
involving a tax on accumulated 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 opinions use “derived” and
“realized” more or less interchangeably. 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. Edwards , 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 ratified requires that a
gain be “realized” or “derived”— e . g ., through a sale
or other transaction—to be taxed without apportionment. Merchants’ Loan & Trust Co. v. Smietanka , 255 U.S.
509 , 519–520 (1921); see post , at 23–25
(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 ratification of
the Sixteenth Amendment, income “was used in ordinary parlance to
refer only to realized gains.” Brief for Professors of Law and
Linguistics as Amicus Curiae 17; see id. , at
18–22 (instances of the word “income” between 1900 and 1912 in the
Corpus of Historical American English referred to “economic gain
tied to a realization event”).

															Regardless of whether one uses the term
“derived” or “realized,” the important point is this: The Sixteenth
Amendment 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
KisanKraft shares. Shares yield income when the corporation
declares a dividend— i . e ., when the corporation
distributes its profits 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”); Gibbons v. Mahon , 136 U.S.
549 , 557–558 (1890). But KisanKraft 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). Because they have not received a dividend,
profit from selling their shares, or any other pecuniary benefit
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 property” 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 targets appreciation rather than the asset’s
value. As the Government sees it, Congress may tax without
apportionment “ 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 upholding an unapportioned tax on appreciation. Tr. of
Oral Arg. 89, 91–92. That is no surprise, because our precedent
forecloses 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 fruition”). And we have stressed that “economic gain is not always taxable as income.” Bruun , 309 U. S.,
at 469 (emphasis added); see also Commissioner v. Indianapolis Power & Light Co. , 493
U.S. 203 , 214 (1990) (“[A] taxpayer does not realize taxable
income from every event that improves his economic condition”).
Although appreciation looks valuable on paper, “the stockholder has
received nothing out of the company’s assets for his separate use
and benefit,” and market fluctuations could “wip[e] out the entire
investment” before the owner ever receives a dime of “income 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 reasonably 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 liquid assets”; “any unrealized
appreciation in the value of the taxpayer’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 profits 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 itself 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 ]

															C

															In upholding the tax, the Ninth Circuit opined
that “[w]hether the taxpayer has realized income does not determine
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 without apportionment.” 53 F. 4th 507, 508
(CA9 2022) (Bumatay, 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
clarified that “the realization 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
liability, or other profit realized from the completion of a
transaction.” 309 U. S., at 469. In that case, a tenant built
a valuable building on the landlord’s property. Upon termination of
the lease, the landlord regained possession of the property—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 improvement 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 taxable gain.” Ibid. None of that remotely suggests, however, that realization is not
required or (relatedly) that appreciation counts as taxable income.
Instead, it explains that profit (there, the building) is realized
when received, even if it cannot be physically separated 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 income 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 disavowing 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
precedent uniformly holds that it is required before the Government
may tax financial gain without apportionment. Realization 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
definition does not capture them all. See, e . g ., MacLaughlin v. Alliance Ins. Co. , 286 U.S.
244 , 249 (1932) (“sale or other disposition of property”); Safety Car , 297 U. S., at 93 (“profits owing to a
patentee by the infringer of a patent”); Kirby Lumber , 284
U. S., at 2–3 (“clear gain” resulting from corporation
repurchasing bonds it issued for less than the corporation had
initially “received [for] their par value”). The common thread is
that to realize income, one must receive something new and valuable
beyond the property she already owns.

															II

															Though the Moores did not realize income as
shareholders, KisanKraft realized income as a corporation—profits
from supplying farm equipment to customers in India. The Government
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
income that KisanKraft realized. Ante , at 8. Put
differently, 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 definitive” in the Government’s favor. Ante , at 13. I read our cases differently. As I understand
our precedent, it leaves room for Congress to disregard the
corporate 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 partnership’s income. See United States v. Basye , 410 U.S.
441 , 453–454 (1973). Rather, our cases allow Congress to
disregard the corporate form to determine whether the shareholder
received income in substance , if not in form.

															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 addressing this issue—and it was decided more than a
century ago. There, the Standard Oil Company of California chose to
reinvest its profits 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 declared 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 financial position 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 “received nothing out of the company’s
assets for [her] separate use and benefit.” Id ., at 211. The
shareholder’s original investment “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 “evidenc[e]” that her capital previously had appreciated , but the dividends themselves “added 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 corporation’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 whether he has received income taxable by Congress without
apportionment.” 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 unreal; look upon stockholders as
partners, when they are not such . . . and indulge the
fiction that they have received and realized a share of the profits
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 attributed corporate income.

															That left one potential justification 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, adhering to Pollock ’s holding that a tax on a shareholder’s ownership
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
apportionment 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 Amendment 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 requires 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 for tax
purposes. That might be right, but the Court’s reasons for saying
so are wrong: It dismisses the “attribution” portion of Macomber as dicta and argues that four subsequent cases
undercut it. Ante , at 13. I disagree. None of these cases
contradicts Macomber ’s admonition that Congress cannot “look
upon stockholders as partners . . . when they are not”;
Congress may not “indulge the fiction that they have received and
realized a share of the profits of the company” when they have not.
252 U. S., at 214; see also Helvering v. Griffiths , 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 “according 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
partnership. 269 U.S.
110 , 110–111 (1925). We disregarded the state-law label because
the associations acted as corporations: They had “a fixed capital
stock divided into shares,” they “manage[d] their affairs by a
board of directors and executive officers,” 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 association 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 decide whether Congress may treat a corporation like a partnership — 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). Although that case involved a partnership, the
issue was about the “anticipatory assignment of income doctrine.”
See Commissioner v. Banks , 543
U.S. 426 , 433–434 (2005) (“A 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 Income 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 assigning a portion of his income to his wife. 285
U. S., at 141. We rejected that artifice and affirmed
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
“firmly established” rule of partnership taxation that “each
partner must pay taxes on his distributive [ i . e .,
proportional] share of the partnership’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 shareholders on a corporation’s income.[ 4 ]

															Finally, in Helvering v. National
Grocery Co. , 304 U.S.
282 (1938), the Court sustained a deficiency tax imposed on 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 corporation’s various
challenges to the tax, the Court opined that “Kohl, the sole owner
of the business, could not by conducting it as a corporation,
prevent Congress, if it chose to do so, from laying on him
individually the tax on the year’s profits.” Id ., at 288.
That dictum, if correct, is consistent with Macomber ’s
recognition that courts can look through the corporate form to
determine the substance of the shareholder’s relationship to the
income. Because National Grocery’s income 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
attribution—as in the definition 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 corporate
form. That would permit Congress to tax the shareholder 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 ]

															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 affirms 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 attributions not to be
“arbitrary.” Ante , at 22–23. The arbitrariness inquiry, the
Court previews, turns on “the taxpayer’s relationship to the
underlying income.” Ante , at 14, n. 4 (citing Burnet v. Wells , 289 U.S.
670 , 678–679 (1933)).

															I agree that the Constitution prohibits Congress
from arbitrarily 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 income”). But an
arbitrariness limit is implicit in the Sixteenth 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 attribute 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 apportionment just because it
was once somebody else’s income ( e.g. , the
earnings Ford used to purchase the steel).

															While an arbitrariness limit on income
attribution surely exists, its contours are uncertain. We have
never before applied the arbitrariness test to a tax law that
attributes a corporation’s income to its shareholders. At oral
argument, the Government identified a series of factors that the
Court has considered in attribution cases involving license
agreements and trusts. See Tr. of Oral Arg. 119–123. One is whether
the taxpayer has “sufficient 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 benefit” 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 attribute 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
retirement account.

															C

															Congress’s power to attribute the income of
closely held corporations to their shareholders is a difficult
question—and unfortunately, the parties barely addressed it.
Without focused briefing on the attribution question, I would not
resolve it. Subpart F and the MRT may or may not be constitutional,
nonarbitrary attributions of closely held foreign corporations’
income to their shareholders. In this litigation, 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. Ante , at 20–21. 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 unconstitutionality).
Given the Moores’ concession, they have not met that burden here.
For that reason, I concur in the Court’s judgment affirming the
judgment below. Notes 1 Direct taxes also include
a capitation tax, which imposes a tax on every person “without
regard to property, profession, or any other circumstance.” National Federation of Independent Business v. Sebelius , 567 U.S.
519 , 571 (2012) ( NFIB ) (internal quotation marks
omitted; emphasis deleted). 2 Although Ivan Allen
Co. involved the interpretation of a tax statute, our analysis
sheds light on the Constitution’s definition 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)). 3 The Court today does not
cast doubt on Macomber ’s holding that appreciation is not
income. See ante , at 23. 4 Partnerships are distinct
from corporations in many other fundamental ways. For example,
partnerships traditionally do not have a legal identity distinct
from the partners and do not enjoy the limited liability
characteristic of the corporate form. They are instead “an
aggregation of individuals 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 distinct from their
shareholders. See Carden v. Arkoma Associates , 494 U.S.
185 , 187–189 (1990). 5 The Court asserts that
Congress no longer observes Macomber ’s distinction between
shareholders and the corporate entity for tax purposes. Ante , at 11. That paints an incomplete picture. After Macomber , Congress 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; Griffiths , 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 corporate earnings.
Revenue Act of 1937, §201, 50Stat. 822. To my knowledge, Congress
has not returned to that approach for domestic or widely held
corporations of the kind Macomber considered. And while
Congress 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 dismissing the relevance of the corporate
form altogether, it confuses the analysis. SUPREME COURT OF THE UNITED STATES

															_________________

															No. 22–800

															_________________

															CHARLES G. MOORE, et ux., PETITIONERS v. UNITED STATES

															on writ of certiorari to the united states
court of appeals for the ninth circuit

															[June 20, 2024]

															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 challenge
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 several States.”

															The Moores are correct. Sixteenth Amendment
“incomes” include only income realized by the taxpayer. The text
and history of the Amendment make clear that it requires 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,
benefit and disposal.” Id. , at 207. Because the Moores never
actually 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
constitutional requirement.” 36 F. 4th 930, 936 (2022). That
conclusion cannot be reconciled with the Sixteenth Amendment as the
Court correctly interpreted it in Macomber . We therefore
granted certiorari to answer the question “[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 income under the Constitution.” Ante , at 12–13,
n. 3. Instead, the Court answers the question “whether
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.” Ante , at 8. 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
10–11.

															I respectfully dissent. The Ninth Circuit erred
by concluding 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
whatever source derived, without apportionment among the several
States, and without regard to any census or enumeration.” 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 define “income” as “ ‘a gain, a profit,
[or] something of exchangeable value’ [that] is ‘ received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal.’ ” Brief for
Petitioners 1 (quoting Macomber , 252 U. S., at 207).
This idea—that “income” is only something actually available for
the taxpayer’s use—is known as “realization.” The Government
rejects the realization requirement, arguing instead that “income”
captures “all economic gains” whether or not they are actually
realized. Brief for United States 14 (internal quotation marks
omitted).

															“Income” in the Sixteenth Amendment refers only
to income realized by the taxpayer. The Amendment resolved a
long-running conflict over the scope of the Federal Government’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 “derived.” 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 first 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 delicate
constitutional compromise, the original taxing provisions 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 apportionment 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 ratified to
overrule that holding from Pollock , and it can therefore be
understood only in the context of Pollock and the preceding
history.

															1

															The Sixteenth Amendment modified the
Constitution’s original regulations of Congress’s taxing power. The
text of those provisions is therefore the natural starting point
for interpreting the Sixteenth Amendment. The Taxing Clause
provides Congress with broad authority to impose taxes. Other
Clauses, including the Direct Tax Clause, classify different kinds
of taxes and set corresponding limitations on Congress’s power to
impose them. The Sixteenth Amendment 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 impose taxes. And, that
authority is broad. Nothing in the Constitution limits the kinds of
taxes that Congress may impose. As the Court has explained, “the
authority conferred upon Congress by” the Taxing Clause “is
exhaustive and embraces every conceivable power of taxation.” Brushaber v. Union Pacific R. Co. , 240 U.S.
1 , 12 (1916).

															But, the Constitution restricts the manner in
which Congress may impose taxes. It accomplishes this by dividing
taxes into two classes—direct and indirect taxes—and imposing 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 herein
before directed to be taken.” Art. I, §9, cl. 4. The
Constitution does not expressly identify any tax as direct other
than a “Capitation.” A “capitation”—also called a “poll tax”—is
“[a] fixed tax levied on each person within a jurisdiction.”
Black’s Law Dictionary 1760 (11th ed. 2019) (defining “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 14–15.

															Indirect taxes, on the other hand, include
“Duties, Imposts and Excises.” Art. I, §8, cl. 1. These
were taxes that people 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 identified 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 specifies 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 imposed 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
first State contained 100 houses and the second State only 10,
houses in the first 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).

															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 remove the Direct
Tax Clause or the apportionment requirement from the Constitution
entirely. To appreciate the extent 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 the Constitution. It is easy today to take the federal taxing
power for granted. But, at the founding, allowing the National
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 Constitution has significant
implications for the meaning of “incomes” in the Sixteenth
Amendment.

															The American colonial experience inspired
widespread distrust of taxation. See, e . g .,
Declaration of Independence ¶19. The Articles of Confederation
reflected that distrust. Under the Articles, the entire taxing
power was exclusive to the States. The National Government had no
power to impose taxes of any kind. The only revenue for the
National Government was funds “supplied by the several States”
pursuant 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
inadequacy. Raising funds through requisitions was often
ineffective because States felt little urgency to pay their
obligations. See Federalist 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 financial strain placed on the
National Government by the Revolutionary War made that inefficiency
an existential threat to the fledgling Nation.

															The Continental Congress quickly concluded that
financing the war effort would require another source of revenue
for the National Government. “[T]o establish the national credit,”
the Congress’s finance Committee reported in December 1780, “it
will be necessary” for the States to “vest[t] in Congress” “[t]he
exclusive right to duties arising on certain imported articles.” 18
Journals of the Continental Congress 1774–1789, p. 1157 (G.
Hunt ed. 1910). The Congress 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 five per cent.” on most
imports. 19 Journals of the Continental Congress 112 (1912)
(footnote omitted). The President of the Continental Congress
transmitted 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 system. 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 Ratification of the
Constitution 63 (M. Jensen ed. 1976) (Documentary History). But,
because the Articles of Confederation required amendments like the
impost to be approved unanimously, Rhode Island’s refusal defeated
the amendment. Articles of Confederation, 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 operation, bearing hardest on
the most commercial states,” including Rhode Island. Id ., at
788. One State’s jealousy of its lucrative tax base prevented the
reform of the Articles’ flawed requisition system.

															A year later, the Confederation Congress again
proposed a national taxing power with the Impost of 1783. The
proposal 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 financial
condition of the National Government in February 1786. See 30
Journals of the Continental Congress 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 “dangerous to the welfare and peace of the Union,”
Congress asserted “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 include a national taxing power was among the primary
reasons for the Constitutional Convention of 1787. John Adams later
reflected as Vice President: “The opposition of Rhode Island to the
impost seems to have been the instrument which providence thought
fit 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 Continental Congress 74 (R. Hill ed. 1936). Virginia had
been the first 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 finance.
1 Documentary History 196–198 (discussing Congress’s warning of
February 1786). The Virginia delegation likewise emphasized the
“inefficiency 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 controversial at the Constitutional Convention, despite
widespread acknowledgment of the need to reform public finance. The
Virginia plan—a broad outline that was selected as the basis for
the new Government—did not go so far as to include a federal taxing
power. The Virginia delegation apparently considered it less
controversial to open the Convention with a proposal that gave the
Federal Government the ability 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 prevailed, 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 reflected on the use of force
[against delinquent States], the more he doubted the
practicability, the justice and the efficacy of it”). The
Convention proposed the Constitution with its taxing provisions as
described above; they would be ratified unchanged. See 2 id., at 590, 594, 596; supra, at 4–6.

															Unsurprisingly, the proposed creation of a
federal taxing power provoked many of the most passionate
criticisms by opponents of ratification. The Antifederalists warned
that a federal taxing power would destroy the state governments.
Brutus wrote that the central question presented by ratification
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 annihilated,” in part by the
federal taxing power. Id ., at 365.

															The destructive force of the federal taxing
power, as Brutus 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 taxation in all its parts, the
legislatures of the several states will find it impossible to raise
monies to support their governments” and then “dwindle away.” Ibid. Other Antifederalists 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 direct taxes “never
can oppress a particular state by an unequal imposition; because
the Constitution has provided a fixed 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 ]

															With the Constitution’s ratification, the
requisition system was replaced by a system that gave the Federal
Government the taxing power it had lacked under the Articles of
Confederation. 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 taxation, but had to
share it with the Federal Government—an arrangement that motivated
significant opposition to the new Constitution. The limitations on
the Federal Government’s ability to exercise that concurrent power
were thus an essential component of the constitutional
compromise.

															3

															Postratification disagreement about what
qualified as a “direct tax” would eventually lead to the adoption
of the Sixteenth 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 distinguish
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 question 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 Debates 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 Farrand’s Records
350.

															This Court grappled with the question in a
significant case decided soon after ratification. In 1794, the
Third Congress passed “An Act laying duties upon Carriages for the
conveyance of Persons.” Act of June 5, 1794, ch. 45, 1Stat. 373.
The tax was not apportioned among the States. Some opposed the tax
on the theory that a tax on personal property, such as carriages,
was a direct tax that required apportionment.[ 6 ]

															When Daniel Hylton failed to pay the tax on his
125 carriages, 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 personal 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 nothing but a tax on something inseparably annexed to the soil
. . . . A land or poll tax may be considered of this
description.” Id ., at 183.

															Additional disputes over what constituted direct
taxation arose when the Government resorted to new forms of
taxation to finance 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. Pacific 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 ratification-era sources to hint at a slightly more
expansive definition 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 decided” 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 Nation’s first-ever federal income tax. In 1861, Congress
imposed 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, 12Stat. 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 fifth of federal revenues. S.
Weisman, The Great Tax Wars 101–102 (2002) (Weisman). The tax
remained in force, with modifications, until it expired in 1871.
§6, 16Stat. 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 question” was whether the tax was an
unapportioned direct tax that violated the Direct Tax Clause. Id ., at 595. The Court held that the income tax was not a
direct tax. Relying heavily on Hylton’s Case , the Court
reasoned “that direct 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 classification
of taxes “levied by . . . valuation and assessment 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 first federal
income tax in peacetime.

															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 first 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 requirement that made
them politically unpalatable. See supra , at 6 (describing
possible state-by-state variations in rates for apportioned taxes).
Because the Sixteenth Amendment overruled the result in Pollock , an accurate understanding of the case is essential
to understanding the Amendment.

															Congress imposed the Nation’s first 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 benefit 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,
profits, and income received in the preceding calendar year by
[citizens and resident aliens], whether said gains, profits, or
income be derived from any kind of property, rents, interest,
dividends, or salaries, or from any profession, 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 dollars.” §27, 28Stat. 553.

															The income tax was not apportioned among the
States by population.

															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 portions 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 taxpayer argued that “imposing
a tax on the . . . income of bonds or other personal
property . . . imposes a tax on the personal estate
itself.” Ibid .

															The Court endeavored to determine what “were
recognized 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 Convention,
the Federalist Papers, other documents from the ratification
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 ratified. Id ., at 573–574. After reaching a conclusion
about the original meaning of the Constitution, the Court surveyed
its precedents and observed that “in none of them is it determined
that taxes on rents or income 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
difficulty explaining Springer , which stated that direct
taxes are limited to capitation and land taxes and concluded that a
tax on income was an indirect tax. See supra , at 15. 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 for purposes of determining whether a tax on that income
would 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 defining 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
estate.” Ibid . But, the Justices divided evenly on the
question whether the tax was unconstitutional “as to the income
from personal property.” Id ., at 586. The case was therefore
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 explanation
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 fiscal 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 qualified grant” of an apportioned direct-taxation
power built security 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 formation 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 futile, and the object of its framers
defeated.” Id ., at 628. The Court refused to allow the
effect of the Direct Tax Clause to be “refined away by forced
distinctions between” income and source. Ibid .

															5

															The Sixteenth Amendment was designed to
overrule Pollock ’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 Presidential election, both major political parties supported
finding 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 Congress,
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, Washington Post, June 17,
1909, p. 4. Taft therefore asked Congress to “propose an
amendment to the Constitution conferring 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
amendment providing: “The Congress shall have power to lay and
collect direct taxes on incomes without apportionment among the
several States according to population.” 44 Cong. Rec. 3377 (1909).
The proposed amendment’s narrow focus on an income tax was
significant. After all, a constitutional amendment could have
easily eliminated Pollock ’s obstacle 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
original 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 Amendment, 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 Secretary of State certified that the Amendment
had been ratified by the States on February 25, 1913. 37Stat.
1785.

															B

															With a full understanding of the context
against which the Sixteenth Amendment was ratified, two conclusions
become clear. First, because the Amendment abolished Pollock ’s rule that an income tax must be classified as
direct or indirect based on whether a tax on the source of
that income would be direct or indirect, the Amendment created a
constitutional distinction between income and its source. Second,
because Sixteenth Amendment “income” must be distinguished from its
source, the Amendment includes a realization requirement.

															1

															I return, finally, to the text of the
Sixteenth Amendment: “The Congress shall have power to lay and
collect taxes on incomes, from whatever source derived, without
apportionment among the several States, and without regard to any
census or enumeration.” Against the background of Pollock ,
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 Constitution 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 first asked to interpret the
Sixteenth Amendment in Brushaber v. Union Pacific
Railroad Co. , 240 U.S.
1 . A taxpayer raised an exhaustive set of “twenty-one
constitutional objections” to the first 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 consideration of the source whence the income was derived.” Id ., at 18. Pollock stood for the rule that “whether
a tax on income [is] direct” must be determined based upon a
consideration 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.” Ibid .

															The Sixteenth Amendment thus facilitated an
income tax by creating a new constitutional distinction between
“income” 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 classified as direct taxes.

															2

															Because the Sixteenth Amendment requires a way
to distinguish 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 understood at
the time of ratification. The Constitution thus limits
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 mistakenly
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 modified by the Amendment, and that the latter
also may have proper effect, it becomes 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 Government
asserts that the Sixteenth Amendment uses “ ‘income’
. . . to refer to all economic gains.” Brief for United
States 14 (some internal quotation marks omitted). That
understanding 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 definition
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 securities.” Id ., at 16 (alterations and internal quotation marks
omitted). Those increases are “income” in a purely economic sense,
but not in a sense that meaningfully distinguishes 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 concept of realization, as the Court explained that concept in Macomber . The Amendment is clear that the word “income”
refers to something that is “derived.” Dictionaries at the time of
ratification defined “derive” as “[t]o receive, as from a source or
origin” and “to draw.” Webster’s New International Dictionary 601
(1913) (Webster’s). And, that sense of “derived” maps neatly onto Macomber ’s realization-focused definition 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, 13Stat. 281;
§7, 16Stat. 257–258). And, contemporaneous “[d]ictionaries defined
‘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 decision to omit the often-used word
“realized” from the Sixteenth Amendment is significant evidence
that the Amendment does not require realization. See Brief for
United States 16. But, the choice to instead use the near-synonym
“derived” merely reflects the repeated use of the word “derive” 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 illustrate 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., 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 Dictionary, at 612 (defining “income” (citing Waring , 60 Ga., at 99)).

															The text of the Sixteenth Amendment, read
against the background of its adoption, confirms that the “incomes”
that the Sixteenth Amendment allows Congress to tax without
apportionment are only realized incomes. We granted
certiorari 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
reflect a delicate compromise under which the founding generation
took the great risk of ceding much of the States’ exclusive taxing
authority to the Federal Government. Supra , at 7–12. Without
that compromise, the Constitution could easily have been rejected.
To be sure, the States slightly altered the original agreement by
ratifying the Sixteenth Amendment. But, a constitutional amendment
does not affect our duty of fidelity to the aspects of the original
agreement that remain in place—including the Direct Tax Clause. If
a written constitution is to mean anything, the compromises 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 avoidance—to invent an
“attribution” doctrine that sustains the MRT. The majority also
relies on “longstanding congressional practice” to conclude that
the Moores’ claim fails because they cannot distinguish the MRT
from similar taxes imposed 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 8. According 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 17. 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 12–13,
n. 3.

															The majority’s Sixteenth Amendment “attribution”
doctrine is a new invention. The majority justifies its creation by
plucking superficially supportive phrases from an eclectic
selection of tax cases. But, none of the cases supports the
proposition that the Sixteenth Amendment empowers Congress to
freely attribute income to any taxpayer it reasonably 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 individual. Ante , at 9. 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
Congress from taxing as a corporation an association which,
although unincorporated, transacts its business as if it were
incorporated”). Tellingly, 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
directly’ ” or “ ‘upon the individuals carrying on
business in partnership.’ ” Ante , at 9 (quoting 285
U. S., at 142; internal quotation marks omitted). But, the
majority quotes language that is part of a due process 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. Leininger , 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 supra , at
4–5, nn. 4, 6. Because Leininger is a due process case,
it is unclear how it supports the majority’s Sixteenth Amendment
attribution doctrine.

															Next, the majority claims that the Court
“reaffirmed 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 10. But, Heiner is a statutory interpretation case. Under the
applicable statute, the taxpayers were subject to a tax on their
“distributive share, whether distributed or not, of the net income
of the partnership.” §218(a), 40Stat. 1070. The taxpayers argued
only that “there was no distributive share” within the meaning of
the statute, because distribution was currently 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 Congress’s supposed
attribution power.

															The majority completes its survey of
“attribution” precedents 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 10.
But, National Grocery demonstrates Congress’s ability to
legislate against tax-avoidance schemes—not an ability to freely
attribute corporate income to shareholders. The majority
misleadingly describes National Grocery as involving “the
controlling shareholder of a corporation” being taxed “individually
. . . on the year’s profits.” Ante , at 10
(internal quotation marks omitted). In reality, the case involved a
tax paid by a corporation—owned 100% by one person—after the
corporation permitted profits to accumulate without distribution
“ ‘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. The Court
concluded that Congress may legislate to prevent “the sole owner of
[a] business” from “conducting it as a corporation” 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. National Grocery is yet
another tax-evasion case, not an application 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 17.

															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 foreign
corporations under other parts of subpart F. Ante , at 16–21.
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 correct that the Sixteenth Amendment allows Congress to
tax partners on partnership income because “partnerships hav[e] no
existence separate from their partners.” Brief for Petitioners 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 century partnership law and points out
that “legislatures treated partnerships as separate entities in
many contexts,” including for some tax purposes. Ante , at
17–18. But, the fact that a partnership can sometimes be treated as
an entity is beside the point. The significant fact is that
partners 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 corporate shareholders is not like pass-through
taxation of shareholders of “S corporations.” An S corporation is a
corporation 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
partnerships. Indeed, for most tax purposes, S corporations are
equivalent to partnerships, not to corporations. “Tax practitioners
often say that an S corporation is taxed like a partnership.” CCH S
Corp. Guide ¶510, p. 505 (2013); see also West’s Tax Law Dictionary
(2024) (defining “S Corporation” as “Corporation which elects S
status and receives tax treatment similar to a partnership”).
Taxing S corporation 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 Congress’s authority to either tax the corporation
itself on corporate income or attribute the undistributed income to
the shareholders and tax the shareholders.” Ante , at 19.
But, it does not make sense to look to S corporations for
conclusions about the pass-through taxation of corporate
shareholders generally.

															Finally, the MRT is unlike other taxes on
shareholders of closely held foreign corporations. The MRT “differs
from other provisions of Subpart F”—the portion of the Internal
Revenue Code dealing with controlled foreign corporations—because
the MRT does not focus on “the corporation’s receipt of investment
earnings while subject to the shareholders’ 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
corporation earned the sums being taxed,” and it imposes no
liability 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 21. 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 income to a taxpayer.” S. McElroy, The
Mandatory Repatriation 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 significant 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.

															C

															The majority is not ashamed to lay bare the
consequentialist 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 majority frets that
the Moores would “deprive the U. S. Government and the
American people of trillions in lost tax revenue” and “require
Congress to either drastically cut critical national programs or
significantly increase [other] taxes.” Ante , at 21. “The
Constitution does not require that fiscal calamity,” the majority
proclaims. Ibid . I agree. But, if Congress invites calamity
by building the tax base on constitutional 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
fiscal consequences, 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 8, n. 2. And, it concludes by
offering a narrow interpretation of its own holding, hinting at
limiting doctrines, prejudging future taxes, cataloguing the
Government’s concessions, and reserving other questions “for
another day.” Ante , at 22–24. 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 endorses 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
Amendment draws a distinction between income and its source. Ante , at 7. And, it does not dispute that realization is
what distinguishes income from property. Ante , at 8. Those
premises are sufficient to establish that realization is a
constitutional requirement. Sixteenth Amendment “income” is only
realized income. We should not have hesitated to say so in this
case. I respectfully dissent. Notes 1 The General Welfare
Clause—quoted alongside the rest of the Taxing Clause above—is also
an important “qualification on the substantive taxing power.” Health and Hospital Corporation of Marion Cty. v. Talevski , 599 U.S. 166, 206 (2023) (Thomas, J., dissenting).
But, because this case does not implicate that limitation, I do not
further explore the General Welfare Clause. 2 Those “Numbers,” were
originally “determined by adding to the whole Number of free
Persons . . . three fifths of all other Persons.” Art. I,
§2, cl. 3; but see Amdt. 14, §2. 3 For the sake of
completeness, three remaining taxing provisions in the Constitution
of 1789 bear mentioning. First, “a Tax or duty may be imposed” on
the “Importation of such Persons as any of the States now existing
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 define 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 reflect the delicate
balance that the Constitution struck regarding the scope of the
federal taxing power. 4 After the ratification of
the Articles of Confederation in March 1781, the Continental
Congress became the Confederation Congress. See 1 Documentary
History 136. 5 Several state ratifying
conventions proposed amendments to strengthen the protection
provided by the Direct Tax Clause. For example, the Massachusetts
ratifying convention proposed that the Constitution be modified to
allow direct taxes only “when the moneys arising from the impost
and excise are insufficient for the public exigencies,” and even
then only after Congress first attempted to obtain such funds
through requisitions. 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 proposals never became part of the
Constitution, they demonstrate the importance that many ratifying
States placed upon limitations to Congress’s power to lay direct
taxes. 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 barriers of the
constitution . . . wealth may find a precarious defence
in the shield of justice”). 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 profits. 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. 8 In fact, that possibility
was suggested on the Senate floor 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
amendment for the enacting of a single act of legislation”). But,
Senator Brown responded that his “purpose [was] to confine it to
income taxes alone.” Ibid . SUPREME COURT OF THE UNITED STATES

															CHARLES G. MOORE, et ux. v. UNITED
STATES

															on petition for writ of certiorari to the
united states court of appeals for the ninth circuit

															No. 22–800. Decided September 8, 2023

															The motion of petitioners to dispense with
printing the joint appendix is granted.

															Statement of Justice Alito.

															In a letter to The Chief Justice dated August
3, 2023, Senator Richard Durbin, the Chair of the Senate Judiciary
Committee, “urge[d]” The Chief Justice “to take appropriate steps
to ensure” that I recuse in this case.[ 1 ] Recusal is a personal decision for each Justice, and
when there is no sound reason for a Justice to recuse, the Justice
has a duty to sit.[ 2 ] Because
this case is scheduled to be heard soon, and because of the
attention my planned participation in this case has already
received, I respond to these concerns now.

															There is no valid reason for my recusal in this
case. Senator Durbin’s letter expressed the view that recusal is
necessary because I participated in two interviews that resulted in
two articles about my work that appeared in the Wall Street
Journal. The interviews were jointly conducted, and the resulting
articles were jointly written, by James Taranto and David B.
Rivkin, Jr. Mr. Taranto, a prominent journalist, presumably either
wrote or approved everything that appeared in the articles under
his byline, and Senator Durbin’s letter makes no objection relating
to his participation in this project. Senator Durbin argues,
however, that Mr. Rivkin’s participation requires me to recuse
because Mr. Rivkin, who is both a much-published
opinion-journalist[ 3 ] and a
practicing attorney, is one of the attorneys in this case.

															This argument is unsound. When Mr. Rivkin
participated in the interviews and co-authored the articles, he did
so as a journalist, not an advocate. The case in which he is
involved was never mentioned; nor did we discuss any issue in that
case either directly or indirectly. His involvement in the case was
disclosed in the second article, and therefore readers could take
that into account.

															There was nothing out of the ordinary about the
interviews in question. Over the years, many Justices have
participated in interviews with representatives of media entities
that have frequently been parties in cases before the Court,
including NPR,[ 4 ] the New York
Times,[ 5 ] CBS,[ 6 ] Fox News,[ 7 ] National Review,[ 8 ]
and ABC.[ 9 ] Similarly, many of
my colleagues have been interviewed by attorneys who have also
practiced in this Court,[ 10 ]
and some have co-authored books with such attorneys.[ 11 ] Those interviews did not result in or
require recusal.

															Senator Durbin’s request for my recusal is
presumably based on the theory that my vote in Moore will be
affected in some way by the content of the articles that resulted
from the interviews, but that theory fundamentally misunderstands
the circumstances under which Supreme Court Justices must work. We
have no control over the attorneys whom parties select to represent
them, and as a result, we are often presented with cases in which
one of the attorneys has spoken favorably or unfavorably about our
work or character. Similarly, we regularly receive briefs filed by
or on behalf of Members of Congress who have either supported or
opposed our confirmations, or who have made either favorable or
unfavorable comments about us or our work.[ 12 ] We participate in cases in which one or more
of the attorneys is a former law clerk, a former colleague, or an
individual with whom we have long been acquainted. If we recused in
such cases, we would regularly have less than a full bench, and the
Court’s work would be substantially disrupted and distorted.

															In all the instances mentioned above, we are
required to put favorable or unfavorable comments and any personal
connections with an attorney out of our minds and judge the cases
based solely on the law and the facts. And that is what we do.

															For these reasons, there is no sound reason for
my recusal in this case, and in accordance with the duty to sit, I
decline to recuse. Notes 1 Letter from R. Durbin to
J. Roberts (Aug. 3, 2023). 2 See attachment to letter
from The Chief Justice to R. Durbin (Apr. 25, 2023). 3 Mr. Rivkin has published
hundreds of articles, op-eds, and book reviews on a wide variety of
subjects in newspapers and magazines, including the Wall Street
Journal, the Washington Post, the New York Times, USA Today, and
the Los Angeles Times. 4 Justices Breyer and
Sotomayor have interviewed with NPR and did not recuse from a case
in which NPR was respondent. See Yeager v. National Pub.
Radio , No. 19–6442; A. Chang, Justice Stephen Breyer on What
the Court Does Behind Closed Doors, and Hamilton, NPR (Dec. 13,
2015); N. Totenberg, A Justice Deliberates: Sotomayor on Love,
Health and Family, NPR (Jan. 12, 2013). 5 Justice Sotomayor has
interviewed with a journalist for the New York Times and did not
recuse in a case in which the Times was a party. See Brimelow v. The New York Times Co. , No. 21–1030;
Justice S. Sotomayor & L. Greenhouse, A Conversation with
Justice Sotomayor, 123 Yale L. J. Forum 375
(2014). 6 Justices Breyer and
Sotomayor interviewed with CBS News and did not recuse in cases in
which CBS News was a party. See Personal Audio, LLC v. CBS Corp. , No. 20–260; Vernon v. CBS Television
Studios , No. 19–5161; Den Hollander v. CBS News
Inc. , No. 17–1452; Moline v. CBS News Inc. , No.
14–9173; CBS News, Justice Sotomayor Prefers “Sonia from the Bronx”
(Jan. 29, 2013); CBS News, Q&A: Justice Stephen Breyer (Sept.
13, 2015). 7 Justice Gorsuch
interviewed with Fox News and did not recuse in a case in which Fox
News was a party. See Bralich v. Fox News Network,
LLC , No. 21–7528; Fox News, Justice Neil Gorsuch in “Fox &
Friends” Interview: Pay Attention to “Separation of Powers” (Dec.
17, 2019). 8 Justice Gorsuch has
interviewed with National Review and did not recuse in a case in
which National Review was petitioner. See National Review,
Inc. v. Mann , No. 18–1451; C. Cooke, A Conversation with
Justice Neil Gorsuch, Nat. Rev. (Oct. 10, 2019). 9 Chief Justice Roberts
interviewed with ABC and did not recuse in a case in which ABC was
petitioner. See American Broad. Cos., Inc. v. Aereo,
Inc. , No. 13–461; ABC News, Interview with Chief Justice
Roberts (Nov. 13, 2006). 10 For
instance, Bryan Garner has interviewed several Justices, and he
argued a case three Terms ago. See LawProse with Bryan A. Garner,
YouTube, https://www.youtube.com/@lawprosewithbryana.garner6732; T.
Mauro, How Grammar Guru Bryan Garner Made His Way to the Supreme
Court, Nat. L. J. (Dec. 11, 2020); Facebook, Inc. v. Duguid , No. 19–511. 11 See , e.g. , R. Ginsburg &
A. Tyler, Justice, Justice Thou Shalt Pursue: A Life’s Work
Fighting for a More Perfect Union (2021); Brief for Federal Courts
Scholars as Amici Curiae in McDonough v. Smith , O. T. 2018, No. 18–485; N. Gorsuch, A Republic,
If You Can Keep It (2019) (with J. Nitze & D. Feder); Brief for
The Rutherford Institute as Amicus Curiae in Sorenson v. Massachusetts , O. T. 2020, No. 20–1747 (signed by D.
Feder). 12 See , e.g. , Brief for Appellees
in FEC v. Ted Cruz for Senate , O. T. 2021, No. 21–12;
Brief on Jurisdiction for Respondent The Bipartisan Legal Advisory
Group of the U. S. House of Representatives in United
States v. Windsor , O. T. 2012, No. 12–307; Brief for
Current and Former Members of Congress as Amici Curiae in CFPB v. Community Fin. Servs. Assn. of Am. ,
O. T. 2022, No. 22–448; Brief for Current Members of the
United States Congress as Amici Curiae in Mountain Valley
Pipeline, LLC v. The Wilderness Soc. , O. T. 2023,
No. 23A35; Brief for Members of the United States Senate
et al. as Amici Curiae in Groff v. DeJoy ,
O. T. 2022, No. 22–174; Brief for 228 Members of Congress as Amici Curiae and Brief for 236 Members of Congress as Amici Curiae in Dobbs v. Jackson Women’s Health
Org ., O. T. 2019, No. 19–1392.