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Joe Biden can breathe, Supreme Court upholds tax on foreign business income

Joe Biden can breathe, Supreme Court upholds tax on foreign business income

The US Supreme Court declared a special tax imposed on Americans who invest in certain foreign companies unconstitutional and dismissed the case against it on Thursday, Bloomberg reported. The case has been closely followed in the United States, where the ruling could have an impact on Democrats' proposals for a wealth tax.

According to government estimates, the tax could generate $340 billion. Photography: AFP

To understand the decision, we have to go back in time. Married couple, Charles and Kathleen Moore, invested $40,000 in an Indian company called Kisan Craft in 2005 for an 11% stake in the company. The company has been making profits every year since its founding, but the profit was not distributed to shareholders, but was reinvested in the company.

Before the Tax Cuts and Jobs Act was passed in 2017, these dividends were generally free of income tax until they were distributed to shareholders. But after the law came into effect, it happened, and the investing couple had to pay approximately $15,000 in fees, so they complied with it, and then challenged the law in court.

A ruling to reject the tax could have obligated the Tax Authority to refund the amounts already paid.

Also an important point is that according to the bill supported by Democratic Senators Elizabeth Warren and Biden, wealthy Americans will be taxed based on their net worth – that is, all of their assets, not just their income. However, the proposal would have failed before Congressional debate had the House decided in Moore's favor.

The justices made a final decision by 7 to 2, which also indicates a division among conservative lawyers. According to the US Department of Justice, taxes on undistributed income could bring $340 billion to the budget over the next decade.

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The Metropolitan Court rejected Gergely Karacsony's new request that the tax must be paid

“The Council of Judges decided that the mayor is not exempt from paying taxes,” Mihaly Varga said in his Facebook post. The Finance Minister wrote that the capital's court rejected the mayor's request for immediate legal protection, so the treasury collected 2 billion forints from the capital's account.

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