An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
Recently, the Supreme Court ruled seven to two in favor of the constitutionality of the Mandatory Repatriation Tax (MRT) as a valid exercise of Congress’s power to tax shareholders on the undistributed income of corporations in Moore v. United States.
Potential implications stemming from this case are whether Congress can use the Moore case to enact broad wealth taxes and what the negative ramifications might be for family businesses and successful individuals from a tax on unrealized gains.
The decision leaves open the possibility for a future wealth tax, which is often proposed as a tax on assets rather than on income, but overall, our legal experts do not see the ruling having a significant immediate effect on family businesses, or on estate taxes. The opinion is very narrowly focused on the repatriation tax at issue in the case.
In the long run, however, some language in dissenting opinions may help discourage future wealth taxes and lay the foundation for legal changes to any wealth taxes that might be enacted. The ruling also may have a potential deterrence effect and/or signal that there appears to be a segment of the Court that would seriously question the constitutionality of any future tax on unrealized gains.
We will keep you updated as new information on this case becomes available.
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The need for fact-based reporting of issues important to multi generational businesses and protecting a lifetime of savings has never been greater. Now more than ever, multi generational businesses and family businesses are under fire. That's why Family Enterprise USA is passionately working to increase the awareness of issues important to generationally-owned family businesses built on hard work, while continuing to strengthen our presence on Capitol Hill. The issues we fight for or against with Congress in Washington DC include high income tax rates, possible elimination of valuation discounts, increase in capital gains tax, enactment of a wealth tax, and the continued burden of the gift tax, estate tax and generation skipping tax.
Family Enterprise USA promotes generationally owned family business creation, growth, viability, and sustainability by advocating for family businesses and their lifetime of savings with Congress in Washington DC. Since 2007, Family Enterprise USA has represented and celebrated all sizes, professions and industries of family-owned enterprises and multi-generational employers. It is a bi-partisan 501.c3 organization. Family foundations can donate.
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