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Emory Law News Center


Emory Law professor, students file brief in closely watched tax case

Lisa Ashmore |
US Supreme Court

When Moore v. United States is argued this week at the US Supreme Court, students from the Emory Law School Supreme Court Advocacy Program (ELSSCAP) will be watching the potential bombshell case closely. In October, Assistant Professor Alex Zhang filed an amicus brief in support of the United States in collaboration with ELSSCAP, which is the only student-run Supreme Court litigation program in the United States.

“Depending on the court’s reasoning, Moore could become one of the most important tax cases decided by the Supreme Court in decades, or a century,” Zhang said. “It could have direct impact on the constitutionality of proposals to tax the rich, including Elizabeth Warren’s wealth tax and President Biden’s plan to tax unrealized gains. It could also upend many existing tax regimes.”

The brief is based on Zhang’s forthcoming George Washington Law Review article, “Rethinking Eisner v. Macomber, and the Future of Structural Tax Reform.”

The Moores are challenging Section 965 of the Internal Revenue Code, part of the 2017 Tax Cuts and Jobs Act, which imposes a transition tax on undistributed profits accrued by US Controlled Foreign Corporations between 1986 and the end of 2017.

Some critics call the case a preemptive strike for the very wealthy to ensure Congress can’t pass a wealth tax. Also, nullifying the law could make quite a dent in US Treasury coffers, according to the Tax Policy Center’s Briefing Book which states: “The tax revenue raised by this transition tax on earnings accumulated abroad was estimated at $340 billion over the 10 years from 2018 to 2027.” (Corporations may pay tax on the repatriations in installments over eight years.)

The Moores own a reported 11 to 13% stake in an Indian corporation that reinvested its earnings rather than distributing dividends, so the Moores say they didn’t receive any income from their shares. The Mandatory Repatriation Tax increased their taxes by approximately $15,000, and they argue the undistributed profits they accrued do not meet the definition of income under the 16th Amendment.

Zhang worked closely with the brief’s team leaders Jason Huh 24L and Flannery Josey 24L and applauds their work.

“This is a tricky case, and the materials are challenging,” Zhang said. “The ELSSCAP students are brave to take a journey into complex, century-old caselaw on tax.”

Huh was familiar with the Mandatory Repatriation Tax based on his previous work as an accountant. “As nerdy as this may sound, tax is my professional interest and so it was cool to write an entire brief on this subject,” he said. “When I learned that ELSSCAP was writing a brief that related to this tax, it kind of felt like seeing an acquaintance that I had not seen in a while.”

This is Huh’s first ELSSCAP brief, and Josey’s third. Josey also has a longstanding interest in tax law. While taxes are necessary for governing, she says, “at the same time, rules on taxation like caps on asset ownership for people to qualify for Social Security Disability Insurance keep disabled people in poverty.” (Josey is co-president and co-founder of Emory Law’s Disabled Law Student Association, which was a client in two other ELSSCAP briefs: Tyler v. Hennepin County, and Health and Hospital Corporation of Marion County, Indiana v. Talevski.)

Josey noted most people don’t recognize the complexity of tax law vocabulary, and that could have a major impact here—it doesn’t align with conventional English definitions but more so with historical tax systems linked to British property law, economics, and even the remnants of feudalism.

“So in this case, the court’s interpretation of ‘income’ under the 16th Amendment—and which texts inform the court’s interpretation of ‘income’—are incredibly important,” Josey said.

Zhang is a tax scholar who joined Emory Law this year. He says federal courts hear far fewer tax cases today as compared to the 1940s, when tax matters were one of the leading subjects the court handled.

“I think additional judicial engagement in ordinary tax cases—that is, not just potentially bombshell cases like Moore—is a good thing,” Zhang said.

Between March and October, roughly 50 amicus briefs were filed in the case, including by the Cato Institute, the US Chamber of Commerce, and the American Tax Policy Institute. The dream, of course, is that the court cites your brief. While Josey wouldn’t lay odds on that, Huh said he thinks their chances are good.

“I genuinely believe that the brief has a very unique viewpoint,” Huh said. “I am confident that it will stand out from others and be cited.”

“I think the many amicus briefs in Moore will all be helpful as they approach the case from different angles,” Zhang said. “Ours focuses on a nitty-gritty doctrinal issue—the impact of Eisner v. Macomber, an old tax case decided by the court in 1920,” Zhang said. “Many, perhaps most, people have read Macomber to impose a constitutional realization requirement. I think Macomber merely limits Congress to taxing true accretions to a taxpayer’s wealth—That is, it is about income, not realization.” The case is scheduled for oral argument on Dec. 5.

Faculty Advisor and Professor of Practice Paul Koster says more than 60 students worked with ELSSCAP this semester. Their time commitment ranges from three hours a week researching circuit splits, or 20 to 100 hours if they’re working on a brief as a researcher, writer, or team leader. Students writing for Sunday Splits blog may spend 10 to 20 hours writing on a particular split, he said.

“The chance to engage in research, writing, and decision-making on cases and issues before the Supreme Court provides an incredible foundation for students’ legal careers,” Koster said. Hands-on experience handling SCOTUS cases “is not something commonly found even for practicing attorneys. Whether pursuing a career in appellate advocacy or not, students who have participated in ELSSCAP have indicated ELSSCAP has been one of their most meaningful experiences during their law school careers.”

ELSSCAP was formed in 2010 by late Professor David J. Bederman and Kedar Bhatia 13L to provide students with experience in litigation, research and writing, compliance with court rules, and communication with outside counsel. Other ELSSCAP members on the Moore brief were writers Lu Cheng 21C 24L, Julia Bittencourt 19C 25L,and Hadden Martinez 24L; and researchers Nick Smith, 23L 23 PH, Ethan Schnaper 24L, Simon Heinrich 24L, Anna Book 25L, Kylie Doyle 26L, Crenshaw Allen-Hall 26L, Madison LeRoy 26L 26T, and Eduardo Moeller 26L. Read more about ELSSCAP's work here.