WEBVTT - Voting Rights Act Circuit Split, Future Wealth Tax in Question 0:00:02.160 --> 0:00:05.800 You're listening to the Bloomberg Law Podcast. Catch us weekdays 0:00:05.840 --> 0:00:09.680 at ten pm Easter on Bloomberg dot Com, the iHeartRadio app, 0:00:09.720 --> 0:00:12.639 and the Bloomberg Business app, or listen on demand wherever 0:00:12.680 --> 0:00:13.800 you get your podcasts. 0:00:16.440 --> 0:00:17.880 Welcome to the Bloomberg Law Show. 0:00:18.200 --> 0:00:21.680 I'm Greg Storr and I'm Lydia Wheeler. We're filling in 0:00:21.720 --> 0:00:24.120 for June Grasso, who's out this week ahead. 0:00:24.120 --> 0:00:26.000 In this hour, we'll talk about a case that asks 0:00:26.040 --> 0:00:28.639 the US Supreme Court to decide if Congress has the 0:00:28.640 --> 0:00:31.880 authority to tax foreign earnings. Cases being closely watched for 0:00:31.920 --> 0:00:35.000 its potential to stop Congress from creating a future wealth tax. 0:00:35.720 --> 0:00:38.760 But first, a federal appeals court issued a ruling recently 0:00:38.840 --> 0:00:41.519 that seemed to gut the Voting Rates Act, or at 0:00:41.600 --> 0:00:43.920 least a key section of it. Joining us now to 0:00:43.960 --> 0:00:46.800 explain it all is Carolyn Shapiro, co director of the 0:00:46.880 --> 0:00:50.960 Chicago Kent College of Law Institute on the Supreme Court. So, Carolyn, 0:00:51.320 --> 0:00:53.480 tell us what the a Circuit Court of Appeals did here. 0:00:55.000 --> 0:00:59.080 Bisuka said that the Voting Rights Act of nineteen sixty 0:00:59.120 --> 0:01:04.319 five cannot be enforced by private litigants. That the only 0:01:04.400 --> 0:01:07.160 way it can be enforced, and in particular the most 0:01:07.840 --> 0:01:11.880 operative part today, which is Section two can only be 0:01:12.000 --> 0:01:19.360 enforced by the federal government. That's a really remarkable, dramatic, 0:01:19.640 --> 0:01:25.960 and just really unwarranted holding. People have been litigating Section 0:01:26.000 --> 0:01:30.480 two cases for decades, and it's sort of true that 0:01:30.520 --> 0:01:34.800 there's no express Supreme Court opinion that says, in so 0:01:34.920 --> 0:01:39.440 many words, there's a private right of action under Section two. 0:01:40.240 --> 0:01:44.080 But that's because it's been clear for so long that 0:01:44.120 --> 0:01:47.240 there's a right of action under Section two. In fact, 0:01:47.360 --> 0:01:49.760 it's been so clear for so long that kind of 0:01:50.000 --> 0:01:54.920 keeps reenacting the law on that assumption. This would be 0:01:55.520 --> 0:02:00.000 it would be just an incredible upheaval of voting right 0:02:00.840 --> 0:02:04.360 litigation and law if this is allowed to stand. 0:02:04.840 --> 0:02:07.240 Can you just remind us and our listeners what the 0:02:07.280 --> 0:02:10.280 Voting Rights Act does, and in particular what Section two does. 0:02:11.040 --> 0:02:13.640 So, the Voting Rights Act of nineteen sixty five is 0:02:13.919 --> 0:02:18.919 the law that basically made the Fifteenth Amendment, which allowed 0:02:19.520 --> 0:02:23.320 African Americans to vote, made it effective. The Fifteenth Amendment, 0:02:23.360 --> 0:02:27.120 of course, was a Reconstruction era amendment shortly after World 0:02:27.320 --> 0:02:31.120 the Civil War, and then for many many decades it 0:02:31.280 --> 0:02:36.000 was largely ineffective. States in the South found ways to 0:02:36.360 --> 0:02:40.120 make it impossible or difficult for African Americans to vote, 0:02:40.200 --> 0:02:44.160 and the courts basically allowed that to happen, including the 0:02:44.160 --> 0:02:48.239 Supreme Court. In nineteen sixty five, Congress enacted the Voting 0:02:48.320 --> 0:02:51.839 Rights Act, and that really changed everything. It made our 0:02:52.000 --> 0:02:56.600 country the multi racial democracy that we support to be. 0:02:57.520 --> 0:03:00.880 So it's an incredibly important piece of let's aslation. People 0:03:00.960 --> 0:03:02.840 often refer to it as the crown jewel of the 0:03:02.840 --> 0:03:06.840 civil rights business. Section two of the of the Voting 0:03:06.880 --> 0:03:13.359 Rights That provides that where there is a practice or 0:03:13.840 --> 0:03:19.079 a set of policies that make it difficult for a 0:03:19.440 --> 0:03:23.519 group of minority voters to elect the representatives of their 0:03:23.639 --> 0:03:28.760 choice it comparably to the way white voters can that 0:03:28.760 --> 0:03:35.880 that can violate the statute. So, for example, the redistricting 0:03:36.680 --> 0:03:40.320 is done in such a way so that African Americans 0:03:40.560 --> 0:03:47.000 can't elect their own, their favored representatives, that can violate 0:03:47.040 --> 0:03:50.480 Section two of the Voting Rights Act. It doesn't require 0:03:50.640 --> 0:03:55.720 intentional discrimination. It looks to the effects of certain types 0:03:55.760 --> 0:03:59.640 of decisions that states and local governments make about voting. 0:04:00.200 --> 0:04:02.520 It's been very important for many years, but it's even 0:04:02.560 --> 0:04:05.800 more important than it used to be because In twenty thirteen, 0:04:06.720 --> 0:04:11.120 the Supreme Court made the other most significant part of 0:04:11.160 --> 0:04:14.720 the voting Right tech inoperative, which is Section five, the 0:04:14.760 --> 0:04:18.760 part that required certain jurisdictions to get approval before they 0:04:18.839 --> 0:04:20.760 made changes in their voting systems. 0:04:21.440 --> 0:04:22.919 Can you back up a little bit for us and 0:04:22.960 --> 0:04:25.560 explain how this case came about. I know it was 0:04:25.560 --> 0:04:28.560 a lawsuit brought by voters in Arkansas. Is that right? 0:04:29.760 --> 0:04:30.000 Yeah? 0:04:30.040 --> 0:04:38.120 This is an Arkansas case, and the district court in Arkansas, 0:04:38.640 --> 0:04:42.080 I believe, said that it found that there was no 0:04:42.240 --> 0:04:46.679 private right of action under section two of the fourteenth Amendment, 0:04:46.880 --> 0:04:53.359 and it reached that decision, if I'm remembering correctly, even 0:04:53.480 --> 0:04:57.360 without the state having raised the question of its own 0:04:57.400 --> 0:05:01.400 accord claiming that there were. It was a jurisdictional question 0:05:01.440 --> 0:05:05.000 and that therefore it was required to consider that. This 0:05:05.080 --> 0:05:11.160 is a really remarkable overreach. I can't emphasize that enough. 0:05:11.720 --> 0:05:14.320 Tell us about the circuit decision and the reasoning there. 0:05:14.360 --> 0:05:16.800 Why did they say there was no avoute for. 0:05:16.760 --> 0:05:20.200 Private They looked at the language of the statute, and 0:05:20.200 --> 0:05:23.320 they looked at the language of the statute in extremely 0:05:24.800 --> 0:05:28.240 isolated detail. And it is true. The language of the 0:05:28.240 --> 0:05:31.479 statute doesn't contain the words private right of action, and 0:05:31.520 --> 0:05:33.760 the language of the statute doesn't say in so many 0:05:33.800 --> 0:05:39.040 words that private individuals can do under the statute. There 0:05:39.040 --> 0:05:45.520 are many many statutes like that in the federal legislation, 0:05:46.400 --> 0:05:51.600 and historically the Court used to be somewhat more open 0:05:51.720 --> 0:05:56.360 to inferring of private right of action into particular statutes 0:05:56.400 --> 0:06:00.159 than it has become in more recent years. However, it 0:06:00.200 --> 0:06:04.719 has also said that where it's been clear that there's 0:06:04.800 --> 0:06:06.880 a private right of action in the past, that that 0:06:06.960 --> 0:06:09.080 had been inferred in the past, and in particular, where 0:06:09.080 --> 0:06:12.960 Congress has reenacted the statute, the Court shouldn't go back 0:06:13.000 --> 0:06:17.960 and reparse the language of the statute under the wonders 0:06:18.000 --> 0:06:21.160 that did not exist when it was originally enactive. So 0:06:21.920 --> 0:06:25.400 it looks what the atificate is to look at the 0:06:25.440 --> 0:06:29.000 words of the statute in complete isolation of how the 0:06:29.000 --> 0:06:32.839 statute has been applied for decades, and in complete isolation 0:06:33.400 --> 0:06:37.400 of the legislative history. With a reenactment of the statute, 0:06:37.400 --> 0:06:41.159 where it is extremely clear that Congress intended for people 0:06:41.160 --> 0:06:43.400 to be able to bring lawsuits to enforced Section. 0:06:43.200 --> 0:06:48.560 Two, what's exactly is the state arguing in this case, the. 0:06:48.520 --> 0:06:52.240 State is arguing that they just can't be sued unless 0:06:52.400 --> 0:06:55.440 they're being sued by the federal government, which basically means 0:06:55.480 --> 0:06:58.640 that if the federal government doesn't have the resources or 0:06:58.680 --> 0:07:03.200 the ability, or depending on the administration, that desire to 0:07:03.320 --> 0:07:05.920 enforce the Voting Rights Act, the Voting Rights Act doesn't 0:07:05.920 --> 0:07:10.760 get enforced. They're saying that a private person or a 0:07:10.800 --> 0:07:16.160 private individual such as the NAAFP, or individual voters or 0:07:16.200 --> 0:07:20.280 a community organization just simply can't do anything about it, 0:07:20.440 --> 0:07:25.080 regardless of how blatant the violation of their voting rights are, you. 0:07:25.120 --> 0:07:26.720 Know, cal And one thing that struck me about this 0:07:26.800 --> 0:07:30.200 decision is that reading parts of it, at least there 0:07:30.320 --> 0:07:33.080 was a congressional report from i think the House and 0:07:33.800 --> 0:07:38.320 Senate Judiciary committees that said, we understand this law to 0:07:38.720 --> 0:07:43.040 allow for private lawsuits. Is this one of these cases 0:07:43.120 --> 0:07:47.800 where the legislative history what Congress intended and was talking 0:07:47.800 --> 0:07:50.680 about says one thing, but the language of the statute 0:07:50.920 --> 0:07:52.440 at least arguably says something else. 0:07:54.160 --> 0:07:57.640 Well, I think that's how the Eighth took it, interpreted 0:07:58.320 --> 0:08:00.880 the statute, or chose to interpret with the statute. But 0:08:01.240 --> 0:08:06.280 I think that that is a real triumph of form 0:08:06.320 --> 0:08:11.680 over substance. The statute itself doesn't expressly say one way 0:08:11.760 --> 0:08:13.960 or the other whether there's a private right of action. 0:08:14.040 --> 0:08:17.920 It certainly doesn't prohibit there from being one, and historically 0:08:18.680 --> 0:08:23.680 it's been appropriate for courts to infer a private right 0:08:23.720 --> 0:08:28.120 of action. The Court has again in recent years changed 0:08:28.160 --> 0:08:33.000 that approach. But Congress, the Congress that enacted the law 0:08:33.520 --> 0:08:36.920 before Congress changed that approach, of course, didn't know that 0:08:36.920 --> 0:08:38.720 that was going to happen. They were operating on the 0:08:38.720 --> 0:08:42.520 assumption that people have been doing to enforce the voting 0:08:42.559 --> 0:08:44.480 right back for a long time and would continue to 0:08:44.480 --> 0:08:48.360 do so. And we'll say that in our explanation of 0:08:48.960 --> 0:08:53.520 our we enactment of the law. So it's I would 0:08:53.559 --> 0:08:55.440 not say that the law says one thing, in the 0:08:55.480 --> 0:08:59.720 legislative history says another. But that is at least in part, 0:08:59.800 --> 0:09:03.600 how the Eighth Circuit tries to defend its position. 0:09:04.559 --> 0:09:04.760 Well. 0:09:04.880 --> 0:09:07.240 Coming up in the program, we'll dive deeper into the 0:09:07.280 --> 0:09:09.480 recent voting rates ruling out of the Eighth Circuit Court 0:09:09.480 --> 0:09:12.880 of Appeals with Carolyn Shapiro. Remember, you can always get 0:09:12.880 --> 0:09:15.880 the latest legal news by listening to Bloomberg Law podcast 0:09:15.960 --> 0:09:19.760 on Apple, Spotify, or wherever it is you get your podcasts. 0:09:20.440 --> 0:09:23.840 I'm Lydia Wheeler and I'm Greg store. This is Bloomberg. 0:09:30.840 --> 0:09:34.240 You're listening to the Bloomberg Law Podcast. Catch the program 0:09:34.280 --> 0:09:37.640 weekdays at ten pm Eastern on Bloomberg Radio, the tune 0:09:37.679 --> 0:09:40.679 in app, Bloomberg dot Com, and the Bloomberg Business App. 0:09:40.679 --> 0:09:43.520 You can also listen live on Amazon Alexa from our 0:09:43.520 --> 0:09:47.920 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:09:50.000 --> 0:09:53.120 I'm Lydia Wheeler and I'm Greg Store in for June Grosso. 0:09:53.480 --> 0:09:56.520 We've been speaking with Carolyn Shapiro of Chicago Kent College 0:09:56.520 --> 0:09:58.560 of Law about the recent ruling out of the Eighth 0:09:58.640 --> 0:10:02.040 US Circuit Court of Appeals on the Voting Rights Act. So, Carolyn, 0:10:02.080 --> 0:10:04.160 we talked a lot about this ruling coming out of 0:10:04.160 --> 0:10:06.760 the Circuit of a very conservative appeals court. 0:10:08.040 --> 0:10:08.520 There was a. 0:10:08.440 --> 0:10:12.439 Supreme Court decision a couple of years ago that perhaps 0:10:12.520 --> 0:10:16.800 laid the groundwork for this, a concurring opinion by Justice 0:10:16.840 --> 0:10:19.480 Neil Gorsich. Can you tell us a little bit about that. 0:10:20.800 --> 0:10:23.319 Yeah, So this is a case called Burnovitch that came 0:10:23.360 --> 0:10:26.480 out of Arizona, and in this case, it was a 0:10:26.520 --> 0:10:31.360 Section two lawsuit that challenged a number of practices in 0:10:31.400 --> 0:10:35.080 Arizona having to do with the ability for people to 0:10:35.679 --> 0:10:39.760 use mail in ballots and things like that. It was 0:10:39.800 --> 0:10:43.600 what's called a vote denial claim as opposed to vote dilution, 0:10:43.760 --> 0:10:45.600 So it didn't have to do with redistricting. It had 0:10:45.600 --> 0:10:49.360 to do with other practices. And the Supreme Court read 0:10:49.480 --> 0:10:53.200 Section two in that context fairly narrowly, but did not 0:10:53.600 --> 0:10:56.280 address the question of whether there's a private right of action, 0:10:57.440 --> 0:11:02.000 and in fact that wasn't presented. Scursich wrote a concurrence 0:11:02.200 --> 0:11:05.760 in which joined by Justice Thomas. In that concurrence, he said, 0:11:05.800 --> 0:11:10.160 you know, nobody's raised this question, but it's been a 0:11:10.240 --> 0:11:13.320 sort of a question that other courts have asked in 0:11:13.360 --> 0:11:18.280 the past, and he cited a district Court opinion from 0:11:18.360 --> 0:11:21.079 the nineteen eighties as his example of why this is 0:11:21.240 --> 0:11:23.720 remains an open question, which I have to say not 0:11:23.920 --> 0:11:27.400 it might be very persuasive, but he put it out 0:11:27.440 --> 0:11:31.679 there for litigants to pick up, and of course they did. 0:11:31.800 --> 0:11:35.439 That's that's why he did it. And people who read 0:11:35.440 --> 0:11:38.280 the court opinions are looking for those kinds of invitations. 0:11:39.040 --> 0:11:42.960 So both courts, as in the District Court in this 0:11:43.080 --> 0:11:47.760 Arkansas case, and the litigants in the Arkansas case and 0:11:47.920 --> 0:11:50.840 in other cases now as well, are starting to make 0:11:50.840 --> 0:11:54.720 that argument and to say, hey, this is an open question, 0:11:54.760 --> 0:11:57.760 maybe there's no private right of action, and pushing the 0:11:58.280 --> 0:12:01.040 appeals courts to make rulings on that question. 0:12:02.520 --> 0:12:04.840 So, Carolyn, we talked about how the Eighth Circuit Court 0:12:04.840 --> 0:12:07.240 of Appeals here ruled there's no private right of action 0:12:07.920 --> 0:12:10.920 for litigans to come and sue to enforce Section two 0:12:10.960 --> 0:12:13.520 of the Voting Rights Act. But the New Orleans based 0:12:13.520 --> 0:12:16.440 Fifth Circuit Court of Appeals issued a ruling recently on 0:12:16.480 --> 0:12:18.640 this too. What did that court say? 0:12:19.840 --> 0:12:21.800 That court said that there is a private right of action. 0:12:22.960 --> 0:12:27.679 It didn't do a super deep dive into the statute 0:12:28.120 --> 0:12:31.040 of this quite the same sort that the Eighth Circuit 0:12:31.080 --> 0:12:34.400 did in sort of parsing the language the way the 0:12:34.400 --> 0:12:37.440 Eighth Circuit did, but it basically said, you know, there's 0:12:37.480 --> 0:12:41.040 always been a private right of action here, and we 0:12:41.120 --> 0:12:44.200 don't think that this is there's a basis for changing 0:12:44.200 --> 0:12:46.920 that in this moment. That's the law of our circuit, 0:12:46.960 --> 0:12:48.280 and that's the law we're going to apply. 0:12:49.920 --> 0:12:52.840 You know, Carolyn, some listeners may be thinking that there 0:12:52.960 --> 0:12:56.240 was this case out of Alabama in the Supreme Court 0:12:56.440 --> 0:12:59.680 in its last term, and that was a lawsuit brought 0:12:59.720 --> 0:13:03.320 by private litigants, and the Supreme Court did something pretty 0:13:03.320 --> 0:13:09.040 significant in rejecting a republican drawn congressional map there. So, 0:13:09.800 --> 0:13:12.800 can you explain how it can be if there is 0:13:12.840 --> 0:13:16.640 an explanation that the Supreme Court keeps acting like there 0:13:16.720 --> 0:13:19.120 is a private right of action and yet this issue 0:13:19.200 --> 0:13:23.480 apparently is open enough that a federal appeals court decided 0:13:23.520 --> 0:13:25.120 that there is no private right of action. 0:13:26.400 --> 0:13:28.960 Well, I would dispute that really is an open question, 0:13:30.440 --> 0:13:33.000 in part for exactly the reason that you say everybody 0:13:33.440 --> 0:13:36.960 has assumed and has assumed is maybe the wrong word. 0:13:37.120 --> 0:13:40.800 It is. It's an established feature of the law, and 0:13:41.120 --> 0:13:44.080 Congress itself has assumed that there's a private right of 0:13:44.120 --> 0:13:48.680 action in its re enactment of the law repeatedly. But 0:13:49.400 --> 0:13:51.640 it's because it is the case that there is not 0:13:51.720 --> 0:13:55.280 an opinion that says, in so many words, there is 0:13:55.320 --> 0:13:58.520 a private right of action. And you have Justice cour 0:13:58.600 --> 0:14:04.000 Such issuing this invitation, joined by Justice Thomas. Suddenly there's 0:14:04.040 --> 0:14:08.839 an opportunity for forlitigants and courts to say, well, wait 0:14:08.840 --> 0:14:10.600 a minute, let's see how clever we can be and 0:14:10.600 --> 0:14:13.240 come up with an argument that what everybody's always thought 0:14:13.320 --> 0:14:16.840 was true isn't true. Which this is sort of a 0:14:16.920 --> 0:14:20.240 strange way, in my view, to the law to operate, 0:14:22.760 --> 0:14:25.320 and I do think it's quite inconsistent with the case 0:14:25.360 --> 0:14:29.240 you mentioned out of Alabama, Alan versus Milligan. In Alan 0:14:29.320 --> 0:14:33.720 versus Milligan, the court went out of its way to say, 0:14:33.760 --> 0:14:37.920 there's forty years of precedent here. It was not. The 0:14:38.040 --> 0:14:40.800 question was not what whether there's a private right of action. 0:14:40.920 --> 0:14:44.800 The question was how that private right of action operates 0:14:44.880 --> 0:14:47.680 or what it takes to prove a violation of Section 0:14:47.720 --> 0:14:49.840 two of the Voting Rights Act. The court went out 0:14:49.840 --> 0:14:52.040 of its way to say, we are not up ending 0:14:52.280 --> 0:14:57.200 forty decades of present forty years of precedent. It's this 0:14:57.360 --> 0:14:59.240 is the way the law has been, and we don't 0:14:59.640 --> 0:15:03.200 think it appropriate to change it. So well, it didn't 0:15:03.200 --> 0:15:05.720 speak directly to the question that the Eighth Circuit has 0:15:05.760 --> 0:15:10.960 now ruled on. It certainly indicated a significant fidelity to 0:15:11.000 --> 0:15:17.680 an understanding of the statute that has been widespread, again 0:15:17.760 --> 0:15:20.040 not just in the Court, also in Congress. 0:15:21.520 --> 0:15:24.680 It sounds like there's a real circuit split here between 0:15:24.680 --> 0:15:27.560 the Eighth Circuit and the Fifth Circuit. So isn't this 0:15:27.720 --> 0:15:31.200 now present a question that the Supreme Court is going 0:15:31.240 --> 0:15:32.080 to have to resolve? 0:15:33.480 --> 0:15:37.760 Yes, I think it does. The only possibility that would 0:15:37.800 --> 0:15:40.400 prevent that from happening would be if the Eighth Circuit 0:15:40.880 --> 0:15:44.240 Court of Appeals takes the case en banc, which would 0:15:44.240 --> 0:15:48.920 mean that the full Court would reconsider the question issued 0:15:49.200 --> 0:15:52.400 the decision made by the three judge panel and there 0:15:52.480 --> 0:15:56.080 was a dissent, so there were two judges who ruled 0:15:56.200 --> 0:15:58.760 that there's no private right of action and one judge 0:15:58.840 --> 0:16:02.000 who dissented. I don't know how likely it is that 0:16:02.280 --> 0:16:05.360 Theates if it will do that, and on the assumption 0:16:05.440 --> 0:16:07.920 that it doesn't, or if it does take it on blank, 0:16:08.000 --> 0:16:10.360 that it comes out the same way, then yes, I 0:16:10.360 --> 0:16:12.240 think the Supreme Court will certainly have to take this 0:16:12.320 --> 0:16:14.960 case and we'll have to settle a question once and 0:16:15.000 --> 0:16:19.320 for all. Based on the Alabama case, I think it's 0:16:19.560 --> 0:16:23.440 quite unlikely that the Supreme Court would affirm the eighth 0:16:23.520 --> 0:16:23.720 of it. 0:16:24.600 --> 0:16:26.560 That sounds right to me in terms of where the 0:16:26.560 --> 0:16:29.760 Supreme Court seems to be on this question. But in 0:16:29.800 --> 0:16:32.840 the event we're both wrong. In the Supreme Court agrees 0:16:32.920 --> 0:16:36.080 with the Eighth Circuit and says no private right of action. 0:16:36.200 --> 0:16:39.400 Can you just describe the implications of that? What would 0:16:39.440 --> 0:16:42.320 be left of the Voting Rights Act after that sort 0:16:42.360 --> 0:16:42.960 of decision? 0:16:44.000 --> 0:16:50.680 The Voting Rights Act would be really astonishingly ineffective. We 0:16:50.800 --> 0:16:54.480 have already lost Section five, as I mentioned before, the 0:16:54.600 --> 0:16:58.920 part of Voting Rights Act that required covered jurisdictions to 0:16:59.200 --> 0:17:02.600 get permissions for making changes and they're voting and election system. 0:17:03.280 --> 0:17:07.680 That was within hours after the Supreme Court issued that opinion, 0:17:07.840 --> 0:17:12.080 and Shelby County versus Holder States that had been required 0:17:12.119 --> 0:17:17.479 to get that kind of preclearance started enacting laws literally 0:17:17.520 --> 0:17:20.879 immediately that would never have been able to be pre 0:17:21.000 --> 0:17:24.280 cleared and that have had the effect of making it 0:17:24.320 --> 0:17:28.920 harder for minority voters to exercise their rights. Section two 0:17:29.720 --> 0:17:33.639 was actually one of the reasons that the Supreme Court said, well, 0:17:33.680 --> 0:17:37.000 it's okay in that opinion. It's not the end of 0:17:37.040 --> 0:17:40.560 the world for us to get rid of the operation 0:17:40.640 --> 0:17:43.320 of Section five because there's still Section two lawsuits and 0:17:43.320 --> 0:17:47.480 its specifically noted that those losses can be brought by individuals, 0:17:47.680 --> 0:17:52.360 by private litigants. So on that point, the Court itself 0:17:52.400 --> 0:17:57.159 has operated on that assumption in the absence of private plaintiffs, 0:17:57.200 --> 0:17:59.560 the only way these lawsuits could be brought would be 0:17:59.600 --> 0:18:02.160 by the Partment of Justice, and the Department of Justice 0:18:02.240 --> 0:18:05.800 just simply doesn't have the resources to bring all of 0:18:05.800 --> 0:18:09.400 the lawsuits that are brought by private plaintiffs, and under 0:18:09.400 --> 0:18:13.480 some administrations really has indicated no interests at all and 0:18:13.600 --> 0:18:14.600 enforcing the voting like that. 0:18:15.440 --> 0:18:17.960 So, Carolyn, if you and Greg are both right here 0:18:18.119 --> 0:18:22.320 and the Eighth Circuit Court of Appeals decision is overturned 0:18:22.640 --> 0:18:25.639 by the Supreme Court, does that settle all future disputes 0:18:25.720 --> 0:18:27.600 over Section two of the Voting Rights Act. 0:18:28.440 --> 0:18:31.600 Well, certainly doesn't settle all future disputes over Section two. 0:18:32.240 --> 0:18:34.640 Litigates are going to come up with other arguments. There 0:18:34.640 --> 0:18:37.439 are always going to be questions about its scope and 0:18:37.480 --> 0:18:41.879 its application in different circumstances. But it would settle that 0:18:42.080 --> 0:18:44.560 question whether or not there's a private light of action. 0:18:45.400 --> 0:18:48.320 Our thanks to Carolyn Shapiro, co director of the Chicago 0:18:48.440 --> 0:18:51.840 Kent College of Law Institute on the Supreme Court. Coming 0:18:51.920 --> 0:18:54.879 up next on Bloomberg Law Show, we'll talk about a 0:18:54.920 --> 0:18:57.399 tax case that could have big implications for a future 0:18:57.400 --> 0:19:00.399 wealth tax. I'm Lydia Wheeler and I'm Greg Store. 0:19:00.760 --> 0:19:01.800 This is Bloomberg. 0:19:09.320 --> 0:19:12.960 You're listening to the Bloomberg Lawn Podcast. Catch us weekdays 0:19:13.000 --> 0:19:16.520 at ten pm Easter on Bloomberg dot Com, the iHeartRadio 0:19:16.560 --> 0:19:19.320 app and the Bloomberg Business app, or listen on demand 0:19:19.359 --> 0:19:20.920 wherever you get your podcast. 0:19:23.240 --> 0:19:26.360 I'm Lydia Wheeler and I'm Greg Storr in for June Grosso. 0:19:27.080 --> 0:19:29.240 Let's get now to that big tax case the Supreme 0:19:29.280 --> 0:19:32.600 Court is hearing over foreign earnings. It's been closely watched 0:19:32.600 --> 0:19:35.040 for its potential to upend other parts of the tax 0:19:35.080 --> 0:19:39.919 code and potentially affect a future wealth tax. Joining us 0:19:39.920 --> 0:19:43.399 to discuss it is Michael Rappaport. He is a Bloomberg 0:19:43.480 --> 0:19:46.600 Industries reporter covering tax Michael, thanks so much for joining us. 0:19:47.119 --> 0:19:49.639 Thanks for having me so tell us. 0:19:49.680 --> 0:19:52.200 A little background about this case. Who are the people 0:19:52.520 --> 0:19:54.880 involved in How did they get to the Supreme Court? 0:19:55.320 --> 0:19:59.040 Sure the planeff Sir Charleston Kathleen Moore, a retired couple 0:19:59.080 --> 0:20:02.440 from Washington State, and they are challenging a tax bill 0:20:02.520 --> 0:20:05.560 of fourteen thousand, seven or twenty nine dollars that they 0:20:06.119 --> 0:20:08.440 had to pay on the earnings of Kisen Kraft, which 0:20:08.480 --> 0:20:10.960 is a machine tool company. Based in India, in which 0:20:11.000 --> 0:20:13.400 they'd invested because Charles Moore was a friend and former 0:20:13.480 --> 0:20:17.280 colleague of the company's CEO. They contend that the tax 0:20:17.320 --> 0:20:20.040 that was imposed on them is unconstitutional because it was 0:20:20.080 --> 0:20:22.280 based on corporate earnings from kisen Kraft that were not 0:20:22.280 --> 0:20:25.440 actually distributed to them. The lower courts ruled against them, 0:20:25.440 --> 0:20:27.639 but they took their Supreme Court and the High Court agreed. 0:20:27.359 --> 0:20:27.679 To hear it. 0:20:28.240 --> 0:20:30.960 What exactly is this tax? Is a new and where 0:20:30.960 --> 0:20:31.720 did it come from? 0:20:32.320 --> 0:20:35.480 The tax is known as the Mandatory Repatriation Tax or 0:20:35.520 --> 0:20:38.240 the Transition Tax, which was part of the Tax Cuts 0:20:38.240 --> 0:20:40.320 and Jobs Act, the Big Tax the Overhault back in 0:20:40.720 --> 0:20:43.919 twenty seventeen. This is a one time tax on companies 0:20:43.960 --> 0:20:47.439 accumulated foreign earnings. Big US companies had been stashing their 0:20:47.480 --> 0:20:50.640 foreign earnings overseas for many years rather than bring them 0:20:50.640 --> 0:20:52.480 back to the US and have them taxed at US 0:20:52.480 --> 0:20:55.320 corporate tax rates, which at the time were relatively high. 0:20:55.600 --> 0:20:58.159 What the twenty seventeen law did, besides lowering the corporate 0:20:58.200 --> 0:21:00.600 tax rate, was to change the whole time system so 0:21:00.640 --> 0:21:03.440 that all earnings of US companies would be tax going forward, 0:21:03.440 --> 0:21:05.639 no matter where in the world they were located. The 0:21:05.680 --> 0:21:09.200 mandatary repatriation tax was a one time catchup tax imposed 0:21:09.240 --> 0:21:11.760 on those accumulated earnings to make sure that they wouldn't 0:21:11.760 --> 0:21:15.160 be entirely free from US taxation. But it also applies 0:21:15.240 --> 0:21:17.200 to people like the Moors who had a significant stake 0:21:17.240 --> 0:21:20.040 in a foreign company about thirteen percent of their case, 0:21:20.080 --> 0:21:22.159 at thirty percent stake in Kis and craft And they 0:21:22.160 --> 0:21:24.200 were taxing kins and Crafts earnings even though they didn't 0:21:24.200 --> 0:21:27.960 actually receive any distribution of those earnings that falls out 0:21:27.960 --> 0:21:30.840 of the same military repatriation tax. And the Mores claim 0:21:30.880 --> 0:21:32.760 that that's unconstitutional. 0:21:32.800 --> 0:21:35.760 And so why do they claim it's unconstitutional? What's the 0:21:35.920 --> 0:21:37.879 argument that the Moors are making in this case? 0:21:38.200 --> 0:21:41.920 This hinges on what's called realization. The Moors claim that 0:21:42.320 --> 0:21:45.520 it's improper on the sixteenth Amendment of the Constitution, which 0:21:45.560 --> 0:21:48.400 established the USN Tax, to tax them in this fashion 0:21:48.480 --> 0:21:52.720 because they didn't realize didn't actually receive any distribution of 0:21:52.720 --> 0:21:56.639 those earnings. The government's response to that is that the 0:21:56.760 --> 0:21:59.280 tax is legal in the sixtieth Amendment, that it does, 0:21:59.320 --> 0:22:03.640 in fact Congress to tax a shareholder's share of undistributed 0:22:03.840 --> 0:22:07.240 or unrealized corporate earnings. As income to the shareholders. In fact, 0:22:07.280 --> 0:22:10.639 the government says Congress has done so numerous times in 0:22:10.640 --> 0:22:12.640 the one hundred and ten years since the sixteenth Membal 0:22:12.680 --> 0:22:16.520 was ratified. It's imposed taxes like taxes on companies, foreign income, 0:22:16.760 --> 0:22:19.800 and partnership taxes to follow the same principle that you 0:22:19.840 --> 0:22:22.560 don't always have to realize income in order to tax 0:22:22.640 --> 0:22:25.200 on it, and the court has upheld those provisions in 0:22:25.240 --> 0:22:26.080 the past. 0:22:26.640 --> 0:22:28.239 So what's the government arguing here? 0:22:28.320 --> 0:22:28.480 Then? 0:22:28.520 --> 0:22:29.720 On the other side, as I. 0:22:29.720 --> 0:22:33.080 Said, the government's argument is that the repatriot text is legal, 0:22:34.000 --> 0:22:37.679 that in fact, there have been cases in which unrealized 0:22:37.680 --> 0:22:40.880 income is taxable, such as tax on foreign income, tax 0:22:40.920 --> 0:22:43.800 tax on partnerships, and courts have upheld those provisions. 0:22:44.320 --> 0:22:48.240 What are the key precedents here? It seems pretty remarkable 0:22:48.320 --> 0:22:51.320 that the sixteenth Amendment has been around this long and 0:22:51.960 --> 0:22:55.359 the Court has never clearly answered what seems to be 0:22:55.400 --> 0:22:58.160 a pretty basic question about what it covers. 0:22:59.080 --> 0:23:02.320 Well, I wanted to keep precedents certainly from the standpoint 0:23:02.440 --> 0:23:04.919 of what the Moors are claiming, is a case called 0:23:05.240 --> 0:23:09.359 Eisner versus Macomber, which is from nineteen twenty. The Moors 0:23:09.400 --> 0:23:14.159 claim that that case rules out taxes unrealized income. What 0:23:14.200 --> 0:23:17.560 the government says and responses is that, well, that case 0:23:17.680 --> 0:23:19.520 was in a very limited context. It was limited to 0:23:19.600 --> 0:23:22.240 cases in which a company pays a stock dividend to 0:23:22.320 --> 0:23:25.199 a shareholder, and that the court has repeatedly refused to 0:23:25.240 --> 0:23:28.400 extend that principle beyond that limited sort of circumstances. 0:23:29.680 --> 0:23:32.320 So if the court strikes down this tax, what are 0:23:32.320 --> 0:23:34.560 the implications for the rest of the tax code. 0:23:34.960 --> 0:23:37.000 Well, the first and most obvious implication is if you 0:23:37.040 --> 0:23:40.840 strike down the mandatary repatriation tax, it could trigger enormous 0:23:40.840 --> 0:23:43.679 tax refunds for some of the giant multinational companies that 0:23:43.720 --> 0:23:46.640 had been paying billions of dollars in these taxes over 0:23:46.640 --> 0:23:50.040 the last several years, such as Apple, Microsoft, Pfiser. The 0:23:50.080 --> 0:23:52.359