Transcripts For CSPAN Justices 20240706 : vimarsana.com

By americans. It w brought forward by a plaintiff who objected to a clause in a 2017 change in tax law that would have wired a repatriation tax. This is about two. The court squarely held us much just a few years foowg adoption of the amendment. The the presidt kes easy work of the case. It is undisputed the petiors realize nothing from their stock investment. They were taxed not because they had income but becse in 2017 they happened to own sharein corporation. This is a taxn e ownership of property. Dispensing with the need for realization, the framers regarded this as the essential chec on the power of congress to taxrorty. The government cannot identify a single thing congress could not tax its income under its position realization is unnecessary. Without realization there is no limiting principle. Accepting th government position on income would make a cap hash of the current law. Gateway defition of gross income asserts congresses taxing por der the 16th amendment roh reaching all income from whatever srcderived. If the government possession position in this case is right the current law already requires taxpayers to pay on the valuation of bother assets, corporate earnings, any stocks theywnand any paperains from contracts and loans. Going back to 1913 that is how it has worked. The reason the law does not work that way is obvious. Unrealized gains are not iom the only way to make sense of the income tax as it has existed for a century is to stick with the original meaning of the 16th amendment. The court should reairthere is no income without realization prei wco the courts questions. When you say realizationo you have a definition or explanation as to what it is . How is it different from, say, attribution . Like thank you justice tma realization in the main will be receipts. In other situations it will be other types of enjoent of economic gain such as the taxpayer can put that ge gain it to his or her uses and benefits. That might be forgiveness of a loan or assignment of income to a third party. There is certainly realization here by the corporation, if not the taxpayers. Its t case like appreciation of proptyere nothing has happened. Yobuproperty and you are holding for 20 years and you have not sold it and nothing has happed. Here, something has happened. Income has gone to t corporation. Guess the corporation has income. We dont dispute the corporation realiz iome over the decade plus years taxed by t m. I think it is like the instance of property from the pointf view of the shareholders. The shareholder interestn the corporation is only a capital interest, a property interest. The value of their capital has increased. But shareholders know they have not realized any ince. Tell me, why do we permit taxing of individl rtners when either state law or partnership agrme does not realized t income to them . In many states, a partner does not have personal ownership. Does not get the value of the partnership. That we permitted that tax. Thank you justice sotay. A partnership is a fundamentally different form of ownership nter corporation. E w has always recognized a corporation is a person separate from t shareholders in that corporation and there is not a separate personhood that applies to partnerships. The partnerships are group of people that come together to undertaka siness activity and when they do so the income is there income directly. What do y dwith the ways in which we have attributed corporate inco tindividuals . You dont challenge the constitutionality. That is not an issue in this ca. In your brief you dont appear to be challenging it. We think a of followshe commonly accepted method congress has usedo dress changes when a taxpayer has interposed a Corporate Structure between themselves and income. That is the entire purpose of a Corporate Structure. People do that all the time particularly for that purpose. You dont incorporate unless you nt the corporate shiel you dont incorporate unless you want the benefits of corporate protection. Unr your theory subpart f subpart s these are longstanding taxingecnisms by the government and your theory would uerne those as well. I do not think that is right. Subpart f works on categories of income on an occurrence basis where the categories are properly viewed as being earned by the shareholders due to the nature of the categories of income addressed. You can see subpart f is constitutional. I want tunrstand your answer. We thk e defect of the mrt does not aly to subpart f. Dnot think there is. What is the distinction . Just that other parts to th extent they tax income do it on an annual basis and mrt was a one shot that went backwards . Think that is part of it. Subpart f addresses the fundamenl come shift concept. The mrt does not. Subpart f operates on a current basis while the corporation is subject to the control of the corolling shareholders. And the mrt takes no acun there is noueion you meet the definition of subpart f. At least 10 of a company are and the company has to be owned more than 50 by u. S. Owners. So it is identical in terms of birth the percentage of ownership or the percentage of shares. Right. But subpart f aligns e control and thebity to direct income with the year its applicable to it seems what you are attacking is only a due process issue of how long the tax is for, not the ability to tax. I do not think that is right. I think etr you owned a particular piece of property on a given date, the question the mrt asks. I think that is the synod one nonattacks on property. This looks at income while it comes in while the Controlling Shareholder has the ily to redirect that stream of income. Can we talk about whether it is fair to arite from a due process point of view,he income generated by kaizen craft to the moors, aisnct question of whether there was income within the medium to 16th amendment, right . It comes down to a 16th amendment question. A shareholder interest in a corporation including s income is a capital interest and is therora property interest. If there is a reason to look beyond tt d attribute income to the shareholder, that would raise a question of iom and why it is the shareholder is not beg taxed on what would otheise be a property interest. The court has always addressed this sort of question as a question of income. This includes all of the assignment oinme cases in the court has decided over the years. An go back to first principle . The concept of realization was very wellestablished at the time the 16th amendment wa adopted. But the amendment does not reference realization. All the drafters d do was add the word realizeft inco to collect taxes on inme realized. But they never used the word realize. Then i look at the history both before and after the ratification. As far back as 1864. But so far back. Congress taxed games and pfi of all companies whether incorporated or partnerships. It estimated the annual gains, profit, or income of any person entitled to the same, whether divided or undived 13, just eight months after the ratification oth16th amendment, congress included undistributed cpote earnings to certain shareholders. The brief tries to distinguish all thesthgs. But i come back to t main point. Both sides can point to congressional action. Someidot tax unrealized income. We have examples of congress taxing realized unrealized income. Why dont i take it that the plain text of the amendment does not make reference to realizatio i think there are two central features of t tt of the amendment that reflect tt does apply only to realized gains. The first is simply the use of the word income. I would particularlcoend it to the courts attention the amicus brief filed by the professors of law and linguistics which analyzes the use of the word income in pio texts. Llf this goes back and forth. The government has other definitions. We are back at square one is what we are doing weighing historical definitions. The weighing in this cas your honor, is quite lopsided. The veor relies principally on two definitions put forth b economists in the years follinthe amendments adoptionnd neither of which reflect common understanngf the time. One of the economtsecognized he was simply espousing his own onic views divorced from any question o law or common understanding and theecd economists recognized the common understanding iome is what we say it s,ealized gain. So f, as the common understanding of the term was concerned, the only indication that the court has before it aside from dictionaries which, agn, lopsided lay favor our position, is the corpus linguistics analysis t professors of law and linguistics which looks at how the word was used in everyday language at the time. This concludes unanimously where it is possible to distinguish income meant realized gains. The is also in the amendment the language from whatever source derived. As we pointed out derived was generally meant to refer to ncts like receipts. Indeed, again, the amicus brief of the professors of law and linguistics read recognized that when income was described as derived it was always used in atashion. I thought that was just a response to pollock which distinguished between income on personal property and other forms of income and all of the 16th amendment authors were doing was to say the distinion that pollock drew, we do not approve of tha right. I think that whath16th amendment did was removehe necessity to consider whether income camerom one source, property, versus other types of urces. But in so doing it necessarily required as a president that the as president that the amounts tax to be in and not Something Else. Why should te the common meaning of inme rather than the legal meaning . If the 16th amendment was specifically rpoingo this courts legal president related to the meaning of income, i am curious why you think the common meaning of income is what we should be focused on when we try to understand what the 16th amendmen meant. Tha is certainly the apoa the court typically takesn addressing questions of original meaning. Thatside, that is what the court cases have said for merchant banks andacber again and again. That the 16th amendment is to be construed according to its ordinary meani. If the court were to depart from that and say, for examp, at personal property was not subject to apportionntwhich i take to be the thrust othe questions in this direction, taxes on personal property, th is. That would offend pretty much the whole ion of the courts 16th amendment jurisprudence over the last century. But why, ifhawe do is to think about pticular tax, which seems to be wt we have been doingorears. To see whether that tax is to income as understood by attribution or as an excise tax or by other principles. We would not have to consider each tax on its own form. You are asking us to just announce wt realization is out of context. For the last 100 years we have been studiously avoiding doi that because we recognize its dangerous to do that, to say a rdike realization we then have to come up with a worki definition that applies to every piece ofrorty and every way people regain wealth. It does not seem logical to me. Why do not why dont you just concentrate on White Congress cannot say that ctain situations it will endure the corporate form and attribute to the individual shareholder certain income . That is what it has been doing all along. Here it does not need realization. Because, congress has attributed this to the individual owners of the corporation. Respectfully, t crt has already sa in multiple locationshat realization is in fact ruid for there to be income under the 16th amendment. Its not just macomber. It is also maclachlan versus alliance insurance. It is the safety card heating. Yesonertain types of property. But, not all. T ivan allen. We also said taxes, that partnerships can be taxed individually even when the partners are not receiving the property. We have sub set as and asnd f and s and all different forms of wealth we have interpreted to inviduals rather than to the legal forms of ownership. And all of those taxes rely the principle that the court expresd in cases like horst and banks which income should be taxed to he who earns it and enjoys its benefits. I wonder whether there is any realization requirement atll there is quite a history in this cotrof congress taxing ameran shareholders on their gains from Foreign Corporations and you can see why. The u. S. Government cannot tax foreigcoorations directly. They wanted to make sure amics that have stashed eir money in Foreign Corporations watched their money grow and never pay taxes on them. So, there is a long centuriesold history of these kinds of taxes on gains from your holdings in a Foreign Corporation. Why is this any different . Why shouldnt we understand that to be quite wellsettled, that ngress can ilement those taxes and enforce thoseaxes for those purposes . The taxes in that aa ve typically followed the patterns i described. It simply, a taxpayer interposing a corporation using income that would otherwise be theirs. Thatould fit, isnt it . Is not. These are the shame same shareholders as in subpart f. Those pvions typically address things like passive income and relatedar transactions that are probably attributable to a Parent Corporation. A Parent Corporation could own an income generating assets itself or shift that io corporation, into a Foreign Corporation, thereby avoiding the income. What the laws recognize is just as in cases like horst and banks this is effectively an assignment of income that can be attributed to the Parent Corporation fo that reason. Cae, the Parent Corporation is the one that ctrols the flow of income coming in. The mrt by contrast operates as a tax on property. It does not take account of any power that shareholder had over the income as it was coming into the corporation. It only takes account of ownership. That seems to be an argument outiming. We have realization in this case. The entity realized income. The question then is trution. We have long held that congrs may attribute the income of the company to the shareholders, or the partnership to the partners. And the only real wrinkle icing here is that it goes back and captures priores income. I think there are two wrinkles. One,itrespect to the prior year t statute does not quire the shareholders being taxed had any ability to control the disposition of those income the unfermented those years the seconds. Thats not true for the facts of this case . Its not. But you a sing generally. I thi idemonstrates this is a tax on property. Doou own something on a particular dat as opposed to what did you do in the past . Did you have the power ith past . Provisions tax year by year, would that have been permissible . Know, and that is the second wrinkle. The mrt is the inverse of its predecessors in the statutes. All the predecessors le the Foreign Personal Holding Company Provisions as well as subpart s focus subpart f focus on categories oinme and are susceptible to being reassigned into the corra board. Congress has never reached s far to tax the shareholders of Foreign Corporations on the activeusiness income of those corporations. Why is that different analytically . This was part of a big change from a worldwide tax steto a territorial taxes demand this is one piece of that. I am not sure why this issue matters for the ultimate analysis of whether the attribution is the purpose of the law. All the attributions go back to the very beginning that focused on the fraudulent or improper availment of the Corporate Forum to avoid income. They have alwaysonthat historically by focusing on particular categories of income susceptible to that type of abuse. Congre tk that to the max amending subpart f or e years to capture more and more types of that sort of income avoidance. Suart f says you have captured the deal and now lets get Everything Else really Everything Else is the active business income attributle solely for Foreign Corporations or legitimate Business Activities overseas. A shareholder of a foreign corpatns stands in a different sion with respect to the position d a shareholder in microsoft or any her corporation. This is not the type of income that shareholder would in an orna course of affairs, as a matter of reality, be able to shift to a Corporate Forum and thereby avoid reing it themselves. I also want to address the difficulties the governments teretation would raise with respect to the current tax code. I noted, the tax code already reaches the full extent of Congressional Authority under the 16th amendment. And if the government is right, therefore, that certain novel categories of what had heretofore been regarded as unrealized incomer realized appreciation, were subject to taxation under the 16th amendment, those would already be subject to taxation under existing law. Let me ask a question about your argument before you go on wi the government. So, if we agree with y tt the 16th amendment uses income that requires realization mmd, that the m does not me the realization requirement, those are two i think ffent steps of urinalysis. It seems to me all wha done is to mistreat the 1h amendment does not justify the mrt. Dont you still have to demonstrate that the mrt is a direct tax in order to establish athe constitution has been violated . Ithe mrt is not a tax on income i think it stands to reason it would be a tax on the ownership of shares, because otherwise. The government makes another argument in their brief. They offer it could be an eis tax. Five point is dreedany indirect tax, i would think, just has t b uniform under the constitution. It seems if it is more burdened regardless of this issue about realatn to establish that this tax is a direct tain order to sustain your constitutional argument. Am i wro . We le it was a direct tax. The government filed a mioto dismiss and argued it was a tax on income. It did not dpute. I appreciate people have argued this. Wod then send it back to the ninth circuit tdermine whether or not it is a direct tax . Your argument that we c sustain its constitutionality just because we have not had a briefing on this particular aspect of it. I think the court cld enter the question presented. As to whether orot there would be anyinabout the remand it is at the courts discretion whether it wishes to reach the governments excise tax aumt. So far as the argument is concerned, t bear attacks of the statute operates solely based on the ownership of a particular piece of property on a particular date and it takes no count of y pe of Business Operations on the people who it is taxing. That is the sort of tax that is at the high watermark of the urts jurisprudence. Its a tax on property that cannot be sustained as an excise tax. The court could easily make short work of that argument. Into the governments position. Was that argument in th question presented . No, your honor. Was preserved. Was it preserved . No, yr honor it was raised for the first time before this court. As far as the government physician is cceed, think about if a person has a contract toell widgets to a third party in a future year. If the price of widgets goes down so they are le eensive to manufacture or wreck acquire that present had recen economic gain under the government decision that would be taxable. Thank you cnc. Justice thomas . Would your case begin a different, or your argument be y stronger if we were talking about real estate rather than owning stocks in a corporation or an interest in a corporation . No, youhor. Pretty mucal the courts 16th amendmen cases over the course of the last century have concerned personal property in the form of investment. I think it is wellestablished at this time that taxes on personal property. What i am more interested in is notecsarily a distincti between Real Property and rsal property, but rather, being having an investment in a Corporate Forum or partnership where you can actually. Erthere is an argument that the income had been rlid by a corporation iome had not been realized, as you heard this morning, by the partnership and whether or not that should en be attributed to those that inve ithose organizations, inho companies. Whereas, in real estate, unless there is a transaction, a sale, lease or something, there is no taxae ansaction. So, would there be a ffence between a stake in a corporation or partnership as opposed to real estate or other personal property . I dont think s the court has applied the same principles across the sweet events 16th amendment cases. Pretty much all the early one applying the principle we put forward did involve rpate investnt and a different types of corporate reganizations that the government argued resulted in income to shareholders. The court applied the same principlesn ses like ground, for example, involving Real Property and recognizing in that instance had to be realization. Kese in plat the government that released the opposite result with improvement made to Real Property. We dont think the constitutional principles are different. The only difference is with difference with respect to corporate shares is the government might he argument there is some type of constructive realiti under the statute that imposes the x. Ist that, just based on the questions, it seems to be a vulnerability you dont have witheaproperty for instance . I do not think it is a vulnerability given the general principle required angin the nature of the tax. I think it would be a more difficult case if the tax was structured in a different fashion that does not operate the way it does. Does your theory put at risk liteliability companies . Publicly Held Corporations . Limited partnership corporations . There are all sorts ocoorate forums that are there. Your definition, i think, would affect the governments ability to tax those individual partners , these individual srelders . O,our honor. Why not . We dont think tse provisions present any constitutional difficult whatev. Dont know why. Whether it is limid liability or publicly heldistill a corporation. First of all you have distinguisng corporation from parerip, again, you have the doctorate of corporate personhood that the court has long understood does make a difference in the circumstances. Where other types of corporations are concerned there is an election ma ball the shareholders to those corporations to allow taxation. If someone wants to come to the government and say aearning income and that is how i organized my business and am opating in it, i think the government can accept that. You are going back to whether attribution is legal. The queioof attribution is a question of sharehde. Why shod ey get to choose and not the government . Whertottribute the income . Justice kagan . At the risk of repeating some discussion, it seems to tre are four principles and may be hers. But there are four principal kinds of taxation. That congress has repeatedly countenanced. This court has done nothg to get in the way of that. You have t dtinguishing here. I want to make sure i understand your distinctions. And whether there is aingle distinction that covers all these or whether each one has a different explanation. Here are my four. Subpart f, S Corporations, its rtnerships, and itsaxg on an accrual basis so, give me why it is you think we can decide for you was outputting any of those kinds of very establiedaxation schemes at risk . At a 10,000 foot level they all you to the realization line ast s been developed in the court case and send by historical precedent. I would have thought none of them wide. Would. At is why this is my question. Subpart f useth familiar mechanism of simply attributing income to the person that earned it even if they directed it somewhe se. Tas of that nature have long enustified on that basis. Corporations are by eleconf shareholders. They can see this is their income and this is how they are operating your business. I do not think the government should have anbas to not take them at their word should the government not choose to do so. As far as ptnships come in a separate person sits above the shareholders i am sorry, the partners of a partnership. Those have always been treated differently going back to the Dartmouth College days and it was not even you with that point. New at that point. Going ba tincome, recognizing its a wellestablishedriiple that corporations are different from partnerships. That was the basis on which macomber rejected the same arme. With respect to accrual, the court addressed thatss in the case safety car heating and lighting case where it held stdard 16th amendment realization principles apply to the accrual meod so whatever question there might be about that methodology and its constitutional status, at that point it has been long established and it is water unr e bridge. Can i go back to ste thomas question, your own definition of realization . I will givyomy cumbers. Tell me if you disagree or digr wheremccumber said, that wh proceeds from the property, seved om the capital, is received or drawn byhe recipient, the taxpayer, for his separatese. Is that your definition too . Subsequent case law has recognized that the separation concept doesnt necessarily apply to every circumsnc although it does apply in the circumstance of disngshing shareholders versuS Corporations. Yeah, so for example, in brunn, we basically ignored the separation requirement, correct . In that example, it was proved that it was notepable from the land. And that definition would not be very good to explain subpart f, is that true . With the court has recognized in subsequent cases, iishe concept of realization as opposed to actual receipt. So basically, you are saying we have left mccumber behind . No. I think the courts case through glenn shaw glass, up to indianapol per and light or nks, there is something needed for more than mere economic gain. I am not sayi whave left entirely behind any concept of realization, that is a fferent conversation. But we haveefthe mccumber definitionf realization behind . Mccumber goes on to recognize regarding corporations, there may be appropriate cirmsnces for the court to work to ascertain the true rhts of the shareholder. Macomber use the best language th occurred to the judges in the context of the case to express that look, in this case it will be receipts, but in other cases, Something Else may ll qualify. Justice gorsuch . I think the argument we hav heard from the other side is there is a realization requirement at is met here because the corporation realized the income. Then it becomes a question of the realized income. The congress has a free hand there, the 16th amendment says nothing. Your response . The court has always lood at questions of income from the point of view of the shareholder. Cases involving gross income under the tax code, the court has looked at the individual circumstances the shareholder to ascertain as whether the shareholder has realized a gain. The court looked specifically at the fact of different types of Customer Security depots it was not an abstract inquiry were things might be assigned and so forth, it was assigned to decide srelder income. I thi t court would certainly haveo verse cumber, which the government has not asked it to do, to get beyond the idea that some freefloating notion of income is sufficient r e government to point at someinand tax it to a particular individual as their income. If i understandt,he question is whether its income to the taxpayer that is being taxed . Correct. I would like to go back to the discussion you hadit justice jackson. I undersnd your point that the excise argument has been forfeited or perhaps even wait in this case waived in this case. We havthhilton case from a long time ago. Terror carriages were not thought to be a direct tax. The government call this an excise tax . The answer resoundingly would be no. The whole point of the direct tax clause is to mak it difficult for congss to levy these types o taxes and still leaving Authority Available in me of emergency. Tas personal property and things like where investments arconcerned, that was addresd tensively during the ratification debates f t constitution. It was one of th primary arguments of thentederalists against the ratification of the constitution. Permitting congress to levy direct taxes would be a step too far and allow congress to destroy the state and reach family propertacss the country. So the way the framers addressed that was to render these types of taxes specifically subject to apportionmen this was addressed and discussed at the connecticut, n pennsylvania, rifying conventions by james madison, iejustice marshall. This sort of investment is something where taxes on it were subject to apportionment. One more question on policy. If the court were to hold that the realizationequirement somewhere alg e chain, what ulbe the consequences of holding like that . On e door of taxation to practically everything. All property persons own, whether it be income they have received they have in the past, but all property we have ima up of forms of income that have been invested. If this is all necessary with me level of ince, we can say at some in this was income to some person at some level and can be subject to taxation without apportnmt. I suppose we would veo draw lines as to how far back in time one can go in assessin the chain of realization. Ths right. I dont understand how that is done on the constitutional text. If the time is set at a persons birth or many decades in the past, that could reach all of their property. I dont understand what the liti principle would be. Tnkou. Justice kavanaugh . In your brief, you used th phrase constructive realization. I am asking if you could define what you mean constructive realization. We use this as a blanket term to encompass such concepts as assignment of income and refers to the general principle espoused in selike banks, that income should be taxed to a person tt enjoys its benefits. Congress, when it has enacted cases relying on that doctrine, has apoached it in that nature. Assessing whhethe income at issue is something in the ordiryourse of affairs that could be attributed to the person, the singular taxpayer at issue, regarding categories of income or use of the corporate form and so forth. K,hank you. There are cases in which state law said that partners could not have control over the property or pull itut unilaterally, in which we sa is ok for thencome to be attributed to the partner. I understand partnerships are a different kind of form. As an ownership matter, the partners would own it equally, but i dont think our cases have established control as the linchp. Could you point me in theig direction if you disagree. If you accept of the view that Partnership Income is the income of its partners, restrictions such as distributing it in certain circumstances is used in state law to prevent an individual from using their ownnce, spending it on particular item they might wish to purchase. T when we think about how to define income, i think about how control cou bthe word to use, despite distinction between cataand income, the seed and its fruit, right . It seems like contl ght go a little bit too far. Control has always beean essential element of income attribution statutes,ecse the general idea has to be, e taxpayer at issue has the ability to direct that stream of income somewhere else and thereby avoid taxesn it. Why it isnt that a due process issue . You saiitean something that s earned income anywhere along the line ultimately lands in my bank account and can be considedncome to me. Is that a 16th amendment problem or a due process problem, where we he to draw lines about when it is fair to attribute one persons income to someone els the court has traditionally considered it to be a 16th amendmentssue. The Court Considered it a quesonf, did the taxpayer have control over the stream of income that he had in that case redireednto a trust for the benefit of his close family members . Thats the way the court has always analyzed it, from the point of view of theaxpayer and whether that taxpayer has received income or not. In the last question abou subpart f you say income is about whether a persohaan ability to direct the income stre. Mi accurately repeating what you said when it iabt attribution . It aecessary part of it, yes. Nd you said subpart f rporations in general, of which thiS Corporation meets the definition, these corporations in subpart f do not oppose e6th amendment as you see here, coect . Aside from the mrt, yes and is that because, going back to your point about control, is the distinction between mrt and the rest of subpart f, the shareholders have re ability to direct the stream . Its two things. Its not that they have more ability, but any ability. Under the terms of th statute, they dont take into account whether or noa areholder exercised control withha stream of income coming in the door. It oy focuses on ownership in 17, but that degree of control has also been combined historically with the question wther or not the types of income being taxed are those that are susceptible to that sort of abuse, such that attribution is approia . So there is a fraud overlay to this . Is this functioning as a tax shelter, as Justice Kagan was pointing out . Thats a constitutional requirement . Congress certainly viewed it that way. The provisiowa limited specifically by many of the chief pponts of the 16th amendment to aid the precise eson, the precise defect we e addressing here today. Their view was, you cannot ordinarily attribute Corporate Income to shareholders, but when there was fraudulent abuse of a corporation to provi iome. A interested in your conversation wh justus gorsuch about the original meaning of the direct tax clause. I am trying to understand whether it is your posio that as an original matter, the direct tax clause was interpreted to include income and all sor othings, or was it narrow . I thgh originally, as we said in the hilton case, that it was pretty narrowly [inaudible] hilton case had three opinions, twof them viewed them as a consumption tax. Thla view said it w not subjt apportionment what about justice pattersons explanation, that it was designed to protect Southern States and slavery from federal interferce that that s at was going on here . Whenouook at direct taxes, as oosed to indirect, you are talking about certain kinds of things, in that it is not necessarily others income in that sense. I think tha is a matter of individual meaning that is incorrect. Did the court until mccumber ho tt income was direct . Not so much with respect income sorry, sorry, pollock. That addresses the interpretation of theorl tax clauses. So pollock was addressed by th16th amendment, and until then we had a very narrow coepon of direct tax. Tubbs went to that, as i said, all of the 16th amdmt cases over the past century have given cerin taxes on personal proptyn the form of investments. Thk the court would have to upend its jurisprudence iit were to decide the direct tax clse ought to be given some other interpretation. Let me ask you about realization, going back to justice thomass first question and what the definiois. Im trying to understand whether you thi congress has the authority to define what constitutesealization or not. Is that something youre giving to the court through constitutional interpretation, or who decides what the realization line is . Escongress gets deference tt, but it definitely has to try to do that, which is not what it did in this case. This turns ownership and property out on a particular date and does not take into account i dont understand your answer. Could we find there is realization in this caseth there is realization . Who makes the definition of realization . Could the court determine there is realization he der a definition that we are appreciati . The governmentasever argued that there is realization in this case. E government has presented the argument that realization is not quired, so i think it would be unusual for the court to reach out and decide a eson of that impor a ysking us to adopt a particular definition of realization that your client needs in this case . If we adopt a particula position, do you lose . This is applied since the dawn of the 16th amendment. Even though t 16th amendment does not have realization in it. You are saying the implied realization requirement have a definition that you are asking the court to adopt . We are asking the court to say realization is necessary, as the contacbeen espoused in the courts decision over the course of the century. Thank you. Thank you, counsel. Mr. Chief justice, and may it ea the court, the mrt is firmly grounded inhe 16th amendment text and history. Vindman help the amendme allows congress to impose taxes on incomes. Several of those taxes within mrt taxed shareholders on undistributed corporate earnings, including the income taxes in 1864, 1865, 1867 and 1870. This court upheld congresss power to collect those taxes in hubbard. They would have understood afting of taxes on income the 1913 law taxed shareholders on their pro rata shareof undistributed corporate earnings, and the trend tha passed through taxation has continued throughout theext century, from taxes on partners to S Corporation shareholders, the Foreign Corporations shareholde uer subpart f. Against all that history, petitions take their case on macomber. E court has limited macomber to taxes that are not on issue here. If the court extended macomber discussions to taxes on all undistributed busine enings, it would cause a seachange in e x code and lead to several billion dollars of lost tax renu they dont provide a comprehensive definition of constructive realization or explain why it would rescue every provision exce the mrt. My friend today said it is a blanketerm defined by the circumstances, but that is simply circular. By conceding constructive realization, they have acknowledged congresss power to draw a reasonabllis about what counts as income and whom n be taxed on it, which is what congress did in the mrt. Finally, the court doesoteed to resolve any fundamental questions about whether the 16th amendment requires realization. A number of passthrough taxes without our nations history. I welcome the courts questions. When you say realized, it has been realized, what do you mean by that . I thinkhis is a paradigm attic case of realization, the underlying tax base f the mrt are the earnings that actually came into the corporation, the Foreign Corporations coffers. The tax base here was a substantial ordinary business owned income that the Foreign Corporation generated through its operaonin a foreign country and had to date been subject to tax derral. That income has never been taxed at the corporate or entity level. What congress did in the mrt contributed to the liabit realized to the u. S. Sharehde. Outside of the context of the mrt, do you think that the increase of value in Real Property could be a taxabl event . That raises a more difficult question. This presses on e ea of whether you can characterize gains in the term of appreciation and income that is taxable. There is a strong argument, that falls into a definition of income that looks at definitions of iomover time, some of the civil war erance tax laws i pointed to at the beginng our introctn had appreciation based tatn for Certain Property like vestock, and therere important provisions of the tax code that effectively tax indidus on appreciation, for example, the market to market taxes, treating aaxyer as though there was a realizable evt at the end of theax year for certain futures contracts, Life Insurance holdings, security dealers holdings that marking amounts of the value to the market price, even in the absence of any kind of sale. There is strong support f the idea that you contact certain forms of appreciation newberry macomber, and that takes away a lot the strong support for a pretty strong proposition that the governmt cant tax aincome to the property ownereeappreciation in value of the property. So what is left to defend that proposition withou macomber . I disagree with the suggestion that macomber involved the tax on appreciation. I know your argen it is limited to stock dividends, but it has also been recognized, at least in the beginning, before it narrod er time, as standing for the proposition that the government cannot tax theppciation and property. You have taken that off the board yr presentation today. I wonder if you couldivus a little more view, or assurae, and what is left to defend that prosion once you have stabbe macomber. [lghter] we are invoking this own courts precedent about mambs scope and reach. They said it was limited to the stock dividend issue er and it did not representny economic gain to the taxpayer. In oerords, the taxpayer receivedddional sharesro the company, but it was a stock slip and her shares were diluted. The quartet from the taxpayers perspective, there w n difference in her ownership stake in the comp before or aftery. What would you cite, given the fact that macomber is not on the tae . If the court were looking for a limiting principle that takes appreciation offhe table in certain circumstances, i would look at history. I think there is a different Historical Foundation for tha type of tax compared to what we have here, which is a passthrough tax on realized Corporate Income. It was not with the framers of the 16th amendment had in mind, but i do want tooc on a tax base that focuses on realized income and attributes it to a different taxpayer, which is a prevalent feature of the tax code and involves many of the provisions one of the argumtshat has resonated a lot in the coverage of ts se, the adoption of petitioners argumentsou have farreaching consequences isnt that crect . That is correct. Do you think it is fair to explore what the consequenceof your argument would be . I want say at the outset, i thinth courtou resolve this case quite rrly. Realization of incomes t a constitutional requirement, but instead is founded on administrative convenience. Is that correct . The ninth circuit d s realization requirements were founded thats n wther it is a correct interpretation of ou prior precedents, is it your sition that realization is not required . The 16th amendment permits the taxation of income, whether realized or not . We think there is no rule or requirement under the 16th amdmt, and congress is permitted to tax certain forms of unrealized gains. The court does not need to set ouhe to define income for all purposes or announce any brig le rules. It is sufficient here for the court to say, you have before u particular type of tax on particular corporate earnings that were realized, and lk at the history and tradition that demonstrates it fits within congresses authority. So i take it what youai realization is not a requirement. Did you say that explicitly in your brief . We believe realiti is always a requirement. We dont have to agree with you on that for you to prevail, i think you said in youoping as well. Ev leaving open whether realization is a constitutional requirement, there waseazed income here to the entity, and it is attributed to the shareholders in a manner consistent with how congress has done that and theou has allowed. Thats correct. We think here, the constitutional question isui easy and does not require the urto consider some of the foundational questions about the meaning of the 16th amendntn other contexts. We have realized incomet e entity level, and it functions like the passthroughaxes on partnerships, other types of corporate shareholders, aS Corporation shareholders and in the context of Foreign Corporations, the tax de subpart f. So the answer, there need not be realizaon by the taxpayer. There is realizationy me other entity. Correct . Under the 16th amendment, that is correct, but there is also a due process questio about congresss ability to limit realization on income. Thata estion of substantive due process. That is how the court has fram iin cases like burnett versus wells. Anything under substantive due process involving an economic regulation like this, the only thing tt uld need to be shown is that it was tional for congress to do what it did . The court has looked at whether congress has made an arbitrary choe acted unreasonably, but they have looked at whether theaxyer who owes the Tax Liability has a laonship. If it is a rational basis, that is not much. We could say the thirtyyear requirement here is a substantive due process issue, so we dont have to grapple with that here. To be hostwe would be saying, unless you can show it was a riol, that would be sufficient. Iant to be precise about e ctrine here. You mentioned the 30 year look back period. That has to do with retroactivity principles under the due procs ause. Something that has been different is the attribution procs we have been discussing, about whetheroness can apply that at the entity level. We have in normas amount of history and traditionn r side to support the idea that this particular attbuon decision ultimately, we have to talk about this case, but i want to undersndow far the argument goes . Under your aumt, does the 16th amendme aow the taxaonf income . Yodefine income as an increase in an economic gain betwn o points in time. So lets y mebody graduates from school and startand 20 yeas later the person is a billionaire. Can congress tax allf at on the ground as income . If atas already been taxed as i igi it would through annual income taxes, it sounds to me the hypotheticals functioning as a property tax. The appreciation into value over 20 or 30 years. Would congress s w want to reach back and tax all of that . Between two points in tim that is a harder question and here ishy. I think that would fit within an ordinary conceptioof income as covering economic ga tough two points of time. We dont have the same tradition to support congreslevying income tax in that manner. O this point in your brief and unrstand your argument is different today but in your brf, you confronted the question whether congress could tax millions of americans. You say yes. You point to the 1864 civil war laws. You say that would be administratively unworkable. As i understood in your brief, the answer to justice alis question is yes. That could happen. This is an important point and let me clarify that statement was referrg to the idea of pass through taxation of large corporate shareholders. That would function like the mrt. The shareholders would be responsible for a pro rata share of the earnings. Im not sure that is clear. It seemed to me the argument was the change in value over time. Ock prices increase. Could youax that otherwise considered unrealized gain and the answer is yes because they did that in 1864. If there any limitation, it has to do with administrative woabity. In 1854, they were doing a passthrough tax on corporate eain. The calculation was not based on the appreciation in share i dont want to suesa tax on appreciation woulbe invalid. There are appreciationsn e books that are constitutional. Let me say to the question and juic alitos question is pressingn e idea maybe this kind of apection should be beyond the reach. I am asking what the limits of your gunt are. It seems to me trere none. I certainly think congress has brought xi power what i was about to say was here,heelevant question is not whether core has the power to tax in the first pce. The board has said the court has said congress has eny power. The question is whether thats a direct tax that has to be a portion. If i might address what i perceived to be a backup argument the firsarment is nreization requirement. Today a hearing even if there is realization, there was somewhere in the chain realization and congress can attribute it freely ast wishes. I understand that argument but im not sure how we fit it with our president. If we ditch my cumbe i understand your argument. Ls assume macomber is not completely misguided. I look at brun. I look at hearst. It seems to me as i read them they are all trying to work within macombers framework. Talking about is it fair to say there was reazaon to the tax ye not realization somewhere back in the chain of history and income realized by the corporation or a parent or subsidiary. Just as a matter of precedent what is mistaken about that . In those subsequent cases, i would not say the courwa mistaken. It did happen toind realization for those cases. For the taxpayer. For the taxpayer. None of those cases iold a passthrough tax. Looking at what may be the closest precedent, i point to the courts decision in hiner rsus mellon which considered a x partners even when they cannot aesthe ptnership income. The court said that was peectly fine. You have not made an argument there was realization to the xpayer. Just answer that before you launch off. You have not madth argument, right . We dont think the taxs constitutionality depends o whether the taxpayers get a diribution because this is a passthrough tax. I think i will take tt a yes. There are two ways to think about it. There s lated income at the entity level. Congress can attribute that to th taxpayer. Th taxpayer has a close enough relationship to the underlying income for congress to treat it as income to the taxpayer. We dont havehaargument before us. That argument has not been made. We intended to make that argument. I understand our briefing to focuonoth aspects of this issue. We join issueitpetitioners on whether the 16th amendment requires relies asian. Requires realization. Now you are saying it requires realizationut not to the taxpayer. When argument i msing is there was realization to the taxpay. That is noinhe brief. What do i do about that . If you think there is realization to this taxpayer, why didnt you make that gument . We are t ggesting there is anything like strict realization in the sen othe taxpayer having received something in hand. I nt understand petitioners to be saying that is what is requed our cases in brun and horstay there could be constructive realization of partnership situation or a fraud tuion. We have been clear about that. There is some enjoyment th taxpayer has over that money. Some control. He may assign it elsewhere but he controls it. There is some relies asian under macomber som realization demacombers framework. E taxpayer having the interim and is not in the briefs. What do i do about that . I think we did make the argument because wma the point because tthcourt goes down recning some realization, the mrt would fit withinha framework. E titioners have not identified any distinction between how the hecontacts operate and how the mrt operates. Les just say i dont see that argument. Then what you want me too . If i am supposed to vacate and remand for considerati othe question . What would youavme do . I ctaly think in our brief we argued the taxye can properly be held accountable for the corporations iome. I got the aumt either there is no realization or as a backup there is realatn and fair attribution. If i am working within the precedence, if i dont consider them whoy sguided, if im not willing orturn 100 years worth of precedent, and the questions is it fair to say this taxpayer constructively or actually realized this income, should i vacate and remand . You should affirm becaus here, we made the argument the is the same level of control and exactly the same relationship as spart f. We did make this argument. We made the point if the court is focused on things like control influence, there is no relevant distinction becse this is taxing in the same way as subrt operates. What do you think is the significance of petitioners concession subpart f is constitutional . I think that is an incredibly significancoession because even if the court were to apply a lens of control or influence come i think the rightorto use would be relationship to the income. Petitioner have acknowledged 10 of shareholderhave the requisite level of relationship he income which riveted to em. My friend suggested there is some fundamental difference th subpart f because it taxes different types of income. He said it is income where y can impose the form. The 16th amendment says congress contacts allncome from whatever source derived. E text by its own terms makes clear the different forms of income do not make a relevant constitial difference. If you look at it as affectional matter, my friends argument does not withstand scriny. He suggested all of this income could have be bned by the taxpayer himself. That is not explain many important atures like insuring risk outside the country of incorporation for the cfc were doing business in country subject to u. S. Sanctions. Those are part of subpart f income and i dont think there is a relevant distinction. Justice gorsuch said you were ki us to overrule what hundred years of our precedent. Sounds bad. Are you . [laughter] i am not asnghe court overrule any precedent. I am asking the court to follow its precedent that postdates macoernd makes clear the discussion in thatase is relevanto e thought issue there. I recognize there is lgue that seems to have broader sweep. This court has recognized that is not the rightayo read if i might, in macomber, i said realization. You said that is misguided. In fallis, we said we were followin the test laid down in macomber. In brun, w said it was following macombers understanding of income. In horst, it said much the same thing. Im not going to bother with the quote. In each of those cases, it purported to be faithfully followin macomber. You disagreeit that i guess. I disagree with the reading the cases. If y lk at each of the cases, the court did find alation on the facts there bu using different standards than macomber ha articulated. Take brun pure that was a case where you said the court was faithfullypping its interpretation of income but the court disavowed the aspect of macomber that saidouave to be able to separate the enoc in from the underlying property. Talked about control. Butt spoke of applying macomber. The view think it was diluting itself but that is how the court perceived what it was doing. She that count for something . Look at the statements in grfith. The ur said the theoretical sehad been undermined. That it had been limited to the particular type of thought dividend at issue and it did not have controlling wght even with respect to other types of stock dividend. What do you understand to be the current state of o precedent . You said macomber was confronting something that stuck dividend had no economic consequence. That was true. Macomber cou he been decided in a paragra saying that but that is not what the court did. As you say, there are many cases lling macomber which leaves coers own theory of realization in the dust. What do you take b the current state of our precedent we need Pay Attention to. I think of this case had before i another stuck dividend case that involved anoth split, macomber would contro that is what griffitsa. The court itself in any number of follow one cases macomber does not have controlling weight outse the context. The court said the statements were not intended to provide a touchtone for rolng all future growth questions that could arise. Tohe extent that leaves macombers an island unto itself, that is the natural efctf the precedent and we are asking the court to follow that. The president most on point for you you said is high in her. The partnership case. That involve the most analogous task. Explain why that dictates the result here from your pepective since that is the one you are lyg on most. It supports the results because the court confronted a tuation where partners claimed they could not lawfully be taxed on Partnership Income on the passthrough basis bau state law operated to preclude any distbuons to them. E rtners were not going to personally realize the iome. State law prohibited the distribution. Court rejected the claim from the rtrs and said it did not make a difference with respect to the permissibility of the passthrough tax to the partners themselves. Petitioners have suggested partners can be eabshed on the line because they say partnerships have a different legal status. It is not like partnerships have an innate legal stus they are creatures of state law anthere any number of states that define a partnership as distinct fm e partners themselves. Weavgood case law that governsuart f funny the lower courts. This has been applied in numerous additional contacts additialontexts. It is not just the mode l. It is all of the history here. Virtually thenrety of this patients experiee th an income tax there have been balls on the book other than e ief time when pollock governed where congssas taxed corporate inco athe shareholder level. It is a classic tax and how the mrtperates. I agree with your scription. I was i slitting the case that is the closest i think. I just wanted you to spell that out. I was just going to ask you heiner is closest on the passthrough point, what is your best federal case upholdi a federal tax on appreciation or do you have one . I dont have the case from thisou that upholds a tax on appreciation. There are fewer xethat have reached appreciation. There are a variety of taxes out there and the market one dark and it is important to rogze the importance of being able to tax in that ntt. The situation that prompted this is the fact taxpayers can manipulate realization events. They can enter into futures contracts and allow the taxpayer to hold on the one that has a gain. And to ll the one that is a loss and immediately have a taxable event. Congress recognized that was a loophole in the tax code that could enable this kind of us there are taxes likthmark to market one that is tax based on appreciation but it is fair to say would be doing something new if we accepted your argument that income is any kind of onomic gn preciation include. I appreciate the opportunity to clarify because we are not asking the court to clarify co that way. If there is a lesson, it is there is a real danger to define income for all purposes or t provide a touchtone for all future cas ipart because our experience with the tax code i taxpayers latch onto those statements and use it as a basis tovoid taxation going forward. I dont think the court needs to approach this issue by adopting some universal definition of income. The Internal Revenue code does not define income. It says income is all income and gives some illustrative examples. I donthk my friends are offering the court a definition because they say income is realizedai or some category of unreaze gains you can say are constructively realized to it is not necessary for the court to comprehensively define it here. I understood your answer to Justice Barrett to be t se as the answer you gave me with reect to unrealized increase in value from one te another time in Real Property that you did not have any authority to support that. Anot pointing to a case in this court i would find taxable. You mean that is the lesson ofacbers demise . Exactly. I think the court recognized ose statements rendered as an abstract matter and opined on taxe not presented had untenable consuees and were a historil there is a t wind a lot of wisdom in followinthcourt. Th court said we do not will of the constitutionality of the tax until we find congress has laid that tax. I still want to understand the limits of your argument. I am quite concerned by the potential implications of petions argument and you stress that in your brief. You say if we will in petitioners favor, large important pieces of the tax code will also logal fall. Ani think that is a fair argument but i think it is also a fa aument to do the same thing with your position and i want to understand the limits of your position. Coming in, i understood your position to be realization is not required and the 16th amendmen realization to the taxpayer is not requedndhe 16th amendment allows the taxation of income and you seem to define income in your brief as economic gain between two points in time. You say it is those wellestablished principles that distinguh income taxes from property taxes. If thats correct, then what about the appreciation of holdings in insecurities by millions and millionof americans, holdings in mutual funds over a time without selling the shares in those mutual funds . Can those be taxed under the 16th amendment . I think if congress enacted a tax kehat and never has, we would likely defend it as an income tax. Dont have to agree the tax would be valid to uphold the mrt. I understand that, in order toule first to rule for petioners, well have to same thing about subpart f or S Corporations, but your answer is that would probably permissible under your interpretation of the 16th amendment . The court could draw lines based on history and if there truly were a widespread t o all amount of appreciation for every taxpayer, that would not look like Anything Congress has done before. The court has sometimes used history that to draw principled lines. We have exactly the opposite tuion where congress has enacted a tax that looks look any numb of passthrough taxes through history. History functions as a rulef inclusion with respect to the opety of this tax. As to the chief jtis question, about the appreciation of valuen al property . Congress has not traditionay xt that. The court if it were confronted with that situation would conclude there is a historical line or limited principle here. And less history rules that t, im not sure h congresss failure to enact a tax in the past brings that outside t 16th amendment if the tax would otherwise fall witn e 16th amendment. You say that is potentially also taxable as income deyour theory. Yesnd think it is clearly taxable under theonitution. This is not a question about congresss power. It is about the motiveaxion and with her to a portion of the tax or not. If some sort of constructive realizatn or subtest for attribution is ruired, what is your test . How far make congress go in treating income to someone who has not realized that income in thstandard understanding of that term . New i wod ply the test e urt used in burnett versusel which pren which presents the most analogous situation. A taxpayer argued because he had been the grantor of the trustee could not be held liable for the gains. It could not ppey be attributive to him because he had no continuing control. The court rejected that claim an it said congress had not acted arbitrarily. Itooked at the taxpayers relationship to the underlng income and concluded there was good reason to tax the grantor in that circumstance including to avoid shifting income to lower income taxpayers. If the court were applyg at kind of attribution analysis, the m like many passthrough xeis equally constitutional. The income has never been taxed at the entity level and there are complications trying to tax Foreign Corporations directly. These largu. Shareholders who by devastation togetr by definition together have a majotytake in closely Held Corporation are t most suitable person or entity to tax. Have we ever said and maybe we should say the 16th amenen applies differently to income or property that is obtained abroad than it does to income or property possessed within the United States . The court has not previously said that but my friend himself suggest in thinking about these issues the courthould focus on the potential for tax avoidance or abuse. That concession underscores the point when youre using a Ren Corporation it provides a ready vehicle to shelter funds offshore, keep them out of the reach of u. S. Taxingutrities and couple get efforts to access those funds even wh ty have a significant connection bau these companies are majorityowned by u. S. Taxpays. Its important toecognize this case is not the paradigmatic case of how the mrt appes the overwhelming mari of taxpayers subject to this are domestic corporatis,ften Parent Companies of whollyowned reign subsiars who have arrange their affairs to be able to keep isoney offor it would be anomalouso ggest the money is forever out of the reach of the u. S. Petitioners re in on the ground floor with thiS Corporation but what if they had simply bought into the company the day before the mr made taxes due . Wouldnt that look an awf lot like aaxn capital rather than a tax on income . Think the underlying nature of what is being taxed which are the realized earnings of the corporation would not change. I think that raises a harder attribution qstn because the taxpayer wouldav less of a direct relationship to the thing being taxed. Maybe someone in that situation would have a betteaspplied to process claim. As you mentioned, the moors themselves are not in that situation. The second thing i would say is if the ce interested in exploring thiss applies due process issue, the mrt is not unique in this regard. Their other taxes in other contexts where the court has recognized someone can be taxed on gain in property that happen before the ownership was a and. Inafversus bowers the Court Considered this issue with reect to the gift tax. You can buy shares in the controlled Foreign Corporation and be taxed under subpart f. The third point would make it is as a factual matter the situation is unlikely to arise and that is because cgrs has enacted other permissions of the code that laeltie the gains to the person who owned the shares at the relevant time. 26 usc section 1248 and it taxes gains at the times of sale. In 2017 with a person is buying share in the company, it taxes gains to the seller as though they were idut of the retained corporate earnings. There is a parallel provision for the buyer under the mrt. That ensures the buyer does not have to include that in his income through a cross reference to section 959. I think congress was tryg attribute the income to the person who ownedhehares at the relevant time. Your brief makesn awful lot out of cleor versus hubbard decided in 1871. Wt degree does your argument depend on that . And he went ultimately we think what carries the day is the overwhelming History Congress has lu ted income. Cupboard upheld that exercise of authority. If youre looking at the text of the 16th amendment, they would have been aware of the pastor taxation. Do you think hubbard decided the tax was atss satisfied article one, section two and article one, section nine which draws a distinction between direct and indirect taxes . You think the court decided that questi . Hbas discussion is brief. Dont think it part the constituon text that way although it did say this was within congresss power. I understand that to be a nstitutional holding. Diagnose that the dead not get into the provisions of the constitution. You tnkt was overruled in pollock . I dot think it would be right to s plock was the last word on i even if it was overruled, the 16th amendment came along and itlfeversed. Do you think the pollock courunrstood itself to be overruling hubbard . I think it psible the court undeto itself to be overruling. It was obviously adopting an understanding of wha constitutes a direct tax that was a sharp departure from what haco before. I guess what i would say is it seems to be implausible the drafters of the 16th amendment in ski to overturn pollock and fully reviveonesss preexisting income tax already woulha meant to do so with respect to all the ways congress had exercise that authority except for the type of passthrough tax hubbard specifically approved. If the court in hubbard thought it was overruling the court in bl but it was overruling hubbard, what you make othe fact it does not mentn bbard at as far as i can tell hubbard was never cited the attorneys . I look back at professor fists volume in thelir window homes devise of the supreme courtn at he has to say about pollk d he says llock was a special ceremonial occasion for the court. The greatest lawyers of the day appeared for both sides. The greatest lawys r the day didnt understand tt ere was hubbard that had supported the attorney arguing for the government just didnt realize they h hbard on the book that spoed their position . Maybe they missed an opportunity to make a good arguntn that case. [laughter] ultimately the important point is relying on pollock and trying to parse pollock versus hubbard ignores the effect of the 16th amenen this wasn endment to the constitution that was designed to restore a preexisting power and the right way to look at what that power means is to look at how it had actually been exercised. Justice sotomayor. I dont fault the parties f shooting for the stars and but i guess the tenor of the questions is nobody is happy with anybodys definition of anything, ok . You started by suggesting a narrow ruling. I think there are two ways to ner ally will. Tell me if one is better than thether if at all. First, we can say theris realization requirement. Here, it was realized because the corporation realized it. You have to deawi Justice Gorsuchs concern that you wve that argument. Ma disagree with him but that we can work out among oselves. We could rule that way. Or we could do it the way Justice Kavanaugh starred his question which is we assume eris a realization requirement. And it w m here. Which of the two ways should we do itnd how not and why not . It would be critically important for the court to do it through Justice Kavanaughs approach. I dont think the court needs to resolvabt anything whether the 16th amendment requires realatn. This kind of tax corresponds to passthrough taxes we havead through history. That suffices to resolve this ca. The history is that congress can attribute that realization . That congress can attribute that realization by the corporation to the shareholders and or taxes that look like that at virtually all points in our nations history. The reason i would caution the couraw from adopting a realization requirement is not only we think it is inaccurate, profoundly ahistorical, inconsistent witth text of the 16th ameme but it would wreak havoc on the proper opatn of the tax code. I think there areasthrough taxes that could withstand scrutiny if the Court Affirms the attribution holding but as i mentioned, there are a number of ckly important permissions of the code that dont have that kind of mechanism and dont turn on realization at all. That inclus rk to market taxes, originalssued discount on bonds that drives prices in bond markets and avoids sheltering of income that should be taxable. It includes the expatriation tax wh people renounce their citizenship. There are varis ys in which adopting any form of realization requemt have profound practical consequences and it is unnecessary for the court to down that road in light of the legal armes against that reading. Just to take you back to the implications of mr. Grossmans argument, he has made a number of statements in his brief and today how heould distinguish this tax from many others. From subpart f, from S Corporations, from partnerships, from accrual, from there might be more. What do u rry about and why . I worry none of those proposals hold up and provide a sito distinguish the mrt. First he suggested has to do with control. As i explain tJustice Barrett, the level of control is exactly the same as under subpar f these are 10 shareholders of closely held foreign corpations and so control cannot be the relevant difference. It isot the difference with respect to partnerships and aS Corporation shareholders who might have a lower an0 stake and can have income much riveted to them. Then he says maybe the answer is consent d he points to aS Corporations and says that turns on a theory of consent. Idle think that works either because to any extent there is any kind of relays asian requirement, consentould not cure that differently or give taxpayers a basis to allow congress to tax things outside it authority. The s cporations shareholders might buy their interest in the company and never personally consent to passthrough taxation or they might change their minds and remove their consent. I dont think consent works. Then he says maybe it has something to do with the te of income under subpart f. As ive elained before, we dont think the type of income matters dethe 16th amendment. This is paired pneumatic income. As ordinary business income substantial earnings realid by theompany. I think it would be an anomalous result to say this te income uniquely is exempt from passthrough taxation. Suggests may be a turns on the potential for abuse and maybe that explains some of these other taxes. There again i think the mrt itself responds to the concern these meic corporations, also some individual shareholders have bn le to keep the money offshore out of the closelyeld Foreign Corporations and deferred taxation. So with respect to every possible point of difference we dont think it hol uas a descriptive matt a so there is a concern we have if the court goes down one of these roads and invalidates the mrtt is not a principal distinction. Wh spect to the implicatio of the furthest aches of your argument that juice alito was asking about, you said with respect to a number of taxes which will probably never see but y said if we did see tm,ou would probably defend them. That is your job,ig . [laughter] e generally defend the constitutionality of statutes. How should we think about that set of possibilities . The important starting point is to recognize those are hypotheticals that are unlikely to ever come toass. It is the administrative practicalities of the situation. It i complicated to track ucations in value or engage in a valuation analysis for assets that might hd to value. Some of the hyphecals about taxing all people who have shares or all home appreatn are unlikely to come. To pass. I sohink it is important for the court to not rely on concerns about those type of farfetched hypotheticals to announce bright line rules about at the 16th amendment requires at could take wnritically important provisions of the tax code a tt respond to reallife concerns and gitimate exercises of the taxing power. Many of the times we congress has chosen to tax in the absence of realization it is because taxpayers can abuse the rules. They can manipulatreization events. They can me e of certain structures or Financial Instruments to shield asts from taxation. Any coherent or Proper Administration has to be able to respond to that kind of abuse. Justice gorsu . Would you agree that when the court opens a door, coness tends to walk through it . [laughter] i dont want to overgeneralize on the back and forth between the court and congress but if i am anticipating correctly where youre going maybe you are, maybe you arent. Usually are. [laughter] but if the onl bar to congress om enacting a tax omiions of americans retirement accounts and mutualunds is administrative ability, they are pretty clever over there, are today . Arent they . They know how to get around administration concerns pretty ll. Ihink they would be good reasons for them to avoid the completi. Sure ia policy matter but isnt it the case thatou open a big door . That door is already open. Congress can enact that tax. It has been open forever in yo view. In terms of your argument of theres no difference between income a that unrealized pital gain, you are familiar with the 1918 tax cases. The governments brief in that case, one of my iusious low clerks pulled it and the gornment does draw that distinction and says that kind ofapital gain is not income because the individual received, the taxpayer received nothing. And that is not income. It is a mere gain or loss of capital value. E u familiar with that . m not sure exactly which brief you are talking abou the solicitor generals brief in the 1918 income tax case. Pages 32 and 53. Ive have to look at the rticular issue being coidered. There are a number of statutory realization requiremtshat could explain thetaments. There has been a lot of evolution in the thinking abou these issues following macomber. I recognize the government has taken a broader view of macomber se but that was in an era when the court itself habe unclear about the reach of macomber before the court had limited it. I do thinthe is room for some narrow ground as ste sotomayor suggested. If one thinks the question is attribution you call it, i think your friend on the others would call it, is it realized by t taxpayer . You say is ifaly attribute it to the taxpayer. Potato potato. m from idaho so i love that. You totally get what im saying. If we are talking about the same thing, you make a persuasive argument underhert, the more ore you have conruive control it is attributable to them because they are 10 steholder and some other facts. I may be missing it. I dont e that argument in the brief. Assume that argument has not been me. What do i do . I agree that we have not made the argument expressly in terms of control because we nt think that is the right standard. We did clearly make the argument thmris constitutional for the same reasons. If we think there is some constructive realization or attributio requirementeqred but that has not been argued yet, what should i d if you think it has not been argued yet, i have course disagree on the facts but the court can affirm on a deterrent of ground, even e e party did not raise the court said in dahda versus road states so i thinitould be open for the court airm on background. Ouave argued the tribution is a feature of due pres rather than income under the 16th ameme. All of our cases whether we are talkin about partnerships or you want to talk about s corpse or schedule, ve treated it as whether its a form of inmeo the taxpayer under the 16th amendment. That is how we grounded our analysis so far. It would seem quite a change to move it over to e ocess. The courts central case o attribution was a due process case. This was burnett versus well. You mention partnership earlier. I loedt that and you said that is the best case. Those words dont appear anywhere in justice brandeiss opinion. It is all about whether you can call it fairly attributable or realized by the partner. I think it is perfectly fine forhe court to look at this through the lens of the th amendment. You get to the same result whi is the question would be can Congress Fairly attribute this inco tthe taxpayer and here we havevehelming history and tritn going back to the 1860s and 1870s demonstrating congress can are some of those factors you look at whether they control the entity, whether there is evidence of fraud . What else would you adtohe list . I would look at the taxpayes relationship to the income in the entity. I hesita to try to put the gloss ofonol on it. I think that would incentivize taxpayers ttry to argue an dividual case they dont have control. Im suggesting it might be sufficient. I would agree that might be suicient to establish congress made a fair attribution cion. I would caution the court away from constutnalize and that or saying it is necessary in evy case. What other factors would yo have us look at . The other factors are the statement in made in burne versus wells was whether congress has made an attribution cision unrelated to any privilege or benefit. Using that staar it works for us as well because therere obvious benefits associated with inbusiness through a controlled Foreign Corporation closely he a could keep the money offshore for all of those years subject to tax deferral. Let me pause you there. The foreign aspect of it and t difficulty of otherwise obtaining se kind of tax on it shldactor in our analysis . Those are conditions that cod sufficient. I wouldnt with the court to say they are absolutely necessary in every case. We have things le rtnerships weathers not necessarily any abuse. Any other factors you would have me coid . I think you have covered e waterfront of the things that have emerged in the case law. If i step back to a 30,000 foot level, the one thing i would say i would urge the court not to try to set down and explit t of principles to govern all cases for the reaso ias describing that we have seen taxpayers latch onto tt d seek to avoid taxation. Roger that too. That would take care if we wrote that that way it would take care of all of your concerns about S Corporation, schedule f or the mark to mke and potentially the mrt . Yes i think the mrt in addition to all of those taxes satisfy the pe of criteria the court has looked at relevant to the attribution question. Whether we ttbution or constructive realization. Potato potato. I would shy away from constructive realization because itntduces an additional layer of ambiguity in the code. It meansotctual realization so i think the way i read our precedent, i will stop but the way rd our precedent, it is fairly saying this individual realized, gained control of or could be judged to veone that by coress, this person has ntrol over these assets. You have given me a lpl list of factors from isourts history and practice consistt with our precedent rather than callg all misguided that might work. Fair enough . Iont think it is right to say this listf factors gives the taxpayer sufficient control over the assets because the concept of control can be confusing if its just a majority stake. The S Corporation shareholders might have a 1 ste the company. That is where i have a little bit of disagreement on how to describe what were discussing. That is helpful to me. Justiceavanaugh . You dont win us to use the phrase constructive realization . I think that phrase is hently amorphous. It does not appear in the code. It appears to be a phrase tioners he invented for the purpes of trying to save these other taxes. It would open up immediate disputes abouthat it encompasses. On the proveralpen door of congress, members of Congress Want to get reelecte that is why they are farfetched. Who knows how things would chge. On some of Justice Alitos hypotheticals, if in came to pass, i think you acknowledged i just want to confirm that unlike this case wre you say historical practice supports congresss historical practice, the courts cases, if there were something novel, that lack of storical support would be a strike against it. Not dispositive nesrily. Is that accurate . Heoint i was trying to make as there are huge practical and policy reasons these taxes would not be enacted and if it came to pass, the court could sess that tax on its own terms and it might look to history and think this is sothg new. I want to be clear wdt think the novelty alone would be diosive. Certainly congress has the power to enact texas it has not enacted before but it would provide a reason to scrutinize that tax a little carefully. The court does not have to go down that road because the historis all on our side. One hypo of my own. If tre were a federal tax on the value of someones property, you agree that ia direct tax or on the value of someones holdings, you age that is a direct tax that would have to be apportione corct that is a quintessential tax pperty because it is looking at theot value of the act set and doing it at particular point in time. Maybe you could levy yet again and again on the same value. That is totally different from iome tax where you are taxing the income and of gain over tim a only doing it one time wh any future tax looking to a new increment of gainve a new time. Your position on the mrt and you cite heiner and spa f and s corp. snd you say this isllimilar in kind. The one wrinkle and i wa to make sure we are on the same page as this goes ck lot of years and rules in incomero many past years. Wh suld we say about that . And let me just add, he says ultimately if you caju roll in income at any pntn time, that really becomes not much of a limit at all. Let me react to that in couple different ways. I think the length of the look back period cannot changth underlined character or classificationf at is being taxed as income. This w actual earnings brought by the cpa, kept in their coffers. If it was incomen year one, i dont think there is an expiraon date on classifying it as income in future year. I think the look bac period instead of relatg the 16th amendment or any questions about what income constitutes is a retroactitconcern. It arises under the due process clause and return on whether congress had a legitimate purpose for having this kind of look period and e tional means. We think that is clearly satisfied. Petitioners raised a retroactitdue process argument below. The court rejected in the ninth circuit. Fls under precedent like United States versus carlt. I would urge the court to recognize that is not about the proper characterization of the underlying tax base. I want to followup on your factors to Justice Gorsuch. You talked about how it could be fair, justice kanah just said s corpse, ownership, mrt, to say this is attributable to the shareholders otohe partners or the seller of t trust. How do we know that . Is it because it is closy held . I assume what yo fend on the other site is going to say is they had 10 . They were not majorityolr so they cannot force a distribution. How would you articulate that when it can be fairly attributed . F not talking due process. If her talking about it from a 16th amendment point. The court could rely on the lessons to be drawn from hto andration. Dysfunctions like the early income taxes i pointed to from the 1860s and 1870s that text shareholders on corpat income. At that point, corporations were generally closely held. There were fewer americans who own stock. They functioned analogously to the mrt. They reached a distinctive category of arolders generally in those closely held corporio. I gus at i would say is we think i is a factor in our favor this reaches relatively large s. Shareholders. It is true it is 10 s they dont veo have a majority stake. The premise of congress is these kinds of large shared large shareholders c Work Together with other shareholders in this closely held cporation. There are going to be many of them to direct the companys policy or to force a distribution. That kind have thrho, 10 , appears throughout the law. Not just in e tax code. In the secitcontext, there are additional obligations imposed on 10 shareholds. Wherever the line made be drawn may be drawn on a think about it from this relationship to the funds and level of influence, 10 falls within the line of what should be recognized as permissible. Justice jackson . So are there drawbacks to setting this up in t way that Justice Gorsuch has articulated . I guess im a lileoncerned because i heard you respond to Justice Sotomayor by yi one of your primary concerns is we not suggest that realization is required. Would taking the approach that Justice Gorsuch has articulated que us to do that or could assume or how do we get around the other caution you put forward . If i understoo Justice Gorsuchs proach, the idea would be to recognize we have realized income so the court does not need need to resolve the status of that. The Pressure Point wther congress could enact a passthrough tax on the 10 u. S. Shareholders. Is thataiy encompassed by this qstn . This sort of goes to discuio with justice alito. I thought the question present was about the extent to which the 16th amendment require realization. If we are going now beyond that, rly out of the territory fairly encompaed i think t awer to the question presentedou be we dont have to decide in all contexts. Here treas a realization. Ase id in our brief we dont think the case resents the estion presented because there are actual there was actual realization by. The corporation the real dispute wawhher congress made a fair attribution decision. Why did the government make an argument about excise taxes athend . We think the mrt is constitutionaln excise tax theory as well. There has be suggestioth we did not present that argument below and that is incorrect. In the ninth circuit we said even if t mrt is not properly characterized as an income tax, it is not a direct tax. We sd congress had article one thority to enact it. We did preserve the argen. The ninth circuit did not have occasion to reacitecause it ruled in our favor on the primary income tax argumt. If this court had any doubt on whether thisas a proper income tax, the court pu a firm on the excise tax argument. d mentioned, one of the portant things for the court to keep in mind is 99 of the tax owed under the mrt is owed by Domestic Corporation shareholders. Large u. S. Companies that have these foreign subsidiaries where theyve been Holding Money overseas for a nbeof years and this wou be a tax on the privilege of doing business with those corporate relationships and in that corporate form. We would urge the court not to invalidate the mrt and all of itcircumstances without proper consideration of that matr. Ndhat is because the constuonal question is a direct tax. This relates to your earlier questions about the meaning of helton and whether this can be in any sense to consider a direct tax. At the ver least this is not a tax on land. This is not a tax on personal property we think it is either an exciser come tax. Why shouldnt we take this opportunity to put an end to it . If we were to apply the sta cisis factors that the core go tough when it decides whether or not to formally overrule a precedent, doesnt macomber fail anyway . I agree macomber would fill those factors in an appropriate se the reason we havent asked the court orred overrule macomber is because we just think its inapplicable bthe terms of subsequent precedent. You would say the government would still win on its view that macomber is not good law or controlling in this case . If this court thought it were necessary to walk thrgh the starry decisive factors, i think in each instance macomber was egregiously wrong. It did not grapple with the text of the 16th amendment look at all of the history relevant to that questn. It has been subsequently eroded by any number of additional president s. Congre h relied on the subsequent precedents by and i cahe number of taxes that would not satisfy the realizatioframework. Petitioners acknowledge macombers realization framework could not carry the day because the taxes they haveor constitutional would not survive. Thank you, counsel. A rebualmr. Grossman . Tnk you. The governmentsecalibrated position as explained by my friend is not narrow and the court should not mistake it as such. The governments view that a corporations rnings can be attributed to any corporate shareholder is staggeringly broad. Corporations like microsoft and exxon mobil have hundreds of llions of dollars of retained earnings on their books theyve invested in corporate assets, research and development and other activities. In some cases, those retained earnings exceed the current value of shares. Under the governments view and i think as demonstrated by the mrt, apparently congress could simply text backwards reaching back as far as it would care to do so to attribute those retained earnings going back many years to cuen shareholrs. In some instances in eesof thvae of the current holdings. Think the court should keep in mind there is an impact to that position that purportey narrower addition under the existing code which is there is no carveout against taxing shareholrsn the current code on corra earnings. If those are 16thmement earnings 6th amendment income to shareholders, they are already subject to the income ta through the gateway definition of gross income that reaches everything under the 16th amendment. There is no carveout. Those would already be subject to it. I think this demonstrates the way the governments position ulmake a hash of existing low and cause confusion with respect to howev sit our tasystem functions. By contrast, i dont think there are any ris consequences of the realization priip we have put forward in this case because iishe thread that runs through the courts jurisprudence going over a ceury and is the glue that hos gether the tax code. Every tax that my friend has mentioned falls into one of two categories. Some of the regarding the abuse of theorrate form turn on theories of conruive realization or you might say assignment of inme. I dont think there is much of a distinctn. The remainder are straightforward exci taxes ppted by the long history of coressional practice. These inclu t original issue discount. It isily an excise tax on the transaction regarding the transfer of a bond. Congress has been levying taxes like that for over 130 years. Others like the mark to market taxes are excise taxes o conducting business in specified fashion. Those sort of taxes predate the 16th amendment and theres also case law. If it was simply enough for the f the if it was simply enough to attribute income to anybody with a close relationship to it, all of the courts Corporate Organization cases and cases involving shareholder rits and really pretty much all the sixteenth amendment cases involving trusts and evytng else would have been about a sentence long beuse it wouldnt really take much more than that for th court simply to say, well, theres a close engh relationship and so who cares whether or not the person realized income or not. Of course, thats not the inquiry the court has unrtaken. And so far as macombers rules concerned and the court has apiethe dividing line recognized by macomber as recently as 1975 in ivan allen and its carried forwd e same principle in caseli indianapolis power light in 1990, as well as restating it in cottage savings in99 i dont think real real this concept of realization is anything unfamiliar to ouraw and, indeed, its the only way to understand the current tax code. Ery congress has the the antiincome, income avoidance provisions of the tax code are long, lenhy reticulated. I dont en abody whos had to spend their time reading subpart anpractices in that field. But the reason those are so complicated and reticulated is beuscongress has tried to stay within the realization line. Its done everything it can to fit thatrawork, where it would have been the easiest thing in the worldif if congress thought it had the power to do it, simply to sa well, if you own shares in a foreign corporatio wtever the ownership threshold, simply pay taxes onho earnings. Thats not the way the tax that these sorts of taxing provisnsave ever worked. Inead, they get at the idea who is really earning the co and receiving the benefit by it, and thaterson should be the one to pay taxes on it. We think they alfithat mold. Id like to briefly address the 1864 tax. The court in hubbard recognized that it s tax on property. Subsequently, in brushaber, the court recognized that at the time, that wasnt really conser or thought about as being much of a defect with respect to the direct tax clauses under sort of th reasoning of springer. And, of course, macomber rejected the exact same argument. We would ask the court to reverse. Thank you. Chief juicroberts thank you, counsel, general. The case is submitted. [captions Copyright National cable satellite corp. 2023] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] announcer House Speaker mike johnson has sent a letter to President Biden requesting stronger action on border security. In his letter, speaker johnson could is sized the senate for not considering the house appropriate secure border act of 2023 before the adjourned. He also called on President Biden to utilize existing measures to slow Legal Immigration including the end of catch and release policies and the continued construction of a border wall. The second session of the 118th congress will convene january 3 next year. Welcome. My name is bradley austin. I am an urban ranger. We are here in baltimore, maryland. It was here in the spring of 1826 that he young enslaved africanamerican boy named frederick bailey, later to be called freckles Frederick Douglass, landed to start his adventure and a new chapter in his life. That he chronicled in his first autobiography. He landed on his ship very similar to this. Other passengers on the ship was a herd of sheep that was sent here to baltimore for the baltimore market. He adhan he had on his first pair of pants. This was the first town and city that he saw. As he was dropping off the sheep to the market he was taken by a deckhand to meet the new family he would live with onandoff until he was in his 20s. Frederick douglass lived in a number of homes here. To put this in perspective, Frederick Douglass is now taking care of young the mother is teaching young tommy how to read. He asks the mattress if she can teach him and she said of course. She had no experience of being a slave owner or a slave master or what that entailed. So she escorted him along with tommy his abcs and some small words. And he made remarkable progress. After a couple weeks she shared with her husband what she was doing. And he exploded. He said if you teach an nword how to read, you will ruin him forever as a slave. Frederick douglass later wrote in his autobiography that this was the first antislavery lecture he experienced. And it gave him the motivation to learn and he realized that information is knowledge. So in order to facilitate his self learning, frederick then used the resource he had at hand. One of those was that because of his place in the house and his loft near the kitchen he had access to food, biscuits, and warm bread. And in that situation he was better off than some of the white immigrant boys that were his neighbors. He was able to barter bread for lessons from his white playmates. Announcer weeknights at 9 00 eastern, cspans encore presentation of our 10 part series books that shaped america. Cspan partnered with the library of congress which explored key pieces of literature that have had a profound impact on our country. It describes his childhood years on the Eastern Shore of maryland, this time as a slate in baltimore and his escape north. Our guest is edmund green meant for. Watch cspans encore presentation of books that shaped america weeknights at 9 00 eastern on cspan, or go to cspan. Org booksthatshapedamerica to view the series and learn more about each book featured. Announcer a healthy democracy doesnt just look like this. It looks like this. Where americans can see democracy at work. When citizens are truly informed, our republic thrives. Get informed straight from the source on cspan. Unfiltered, unbiased, word for word. From the nations capitol, to wherever you are. Because the opinion that matters the most is your own. This is what democracy looks like. Cspan, powered by cable. Announcer White House Press secretary Karine Jeanpierre and john kirby discussed a range of policy issues during a White House Press briefing, including an upcoming visit to mexico by secretary of state Antony Blinken and other top cabinet officials to discuss immigration with that nations president. They also weighed in on the recent prisoner swap between the u. S. And venezuela. This is about one hour. Ms. Jeanpierre apologies for the very long two minutes there. Some technical difficulties. So, we are aware of the terrible shooting that took place at Charles University in prague, claiming the lives of at least 15 people and injuring dozens more. The president and the first lady are praying for the families who lost loved ones and everyone else who has been affected by this senseless act of violence. On behalf of the United States we send our condolences and also wish the survivors of this tragic event a speedy recovery. Federal authorities are in touch with their authorities as they investigate this incident and we stand ready to provide Additional Support as needed. As we close out the year we wanted to take a look back at the progress made since President Biden and Vice President harris took office. From day one, our administration has taken on historic challenges and almost three years in we have a record of delivering for the american people. President biden vowed to lower Prescription Drug costs for seniors and families and he is delivering on that promise. Thanks to the inflation reduction act, which every single republican member of congress voted against. We are taking on big pharma. Here are a couple of things that it has allowed us to do. It has allowed us to cap t cost of insulin at 35 for seniors. Allow medicare to negotiate lower prescription dg prices for the first time ever. And save 15 millions americans an average of 800 per year on eir health insurance. Despite never ending attacks fromeplican offia, more americans are covered by quali Affordable Health insurance than ever before, including 7 million more americans enrolled through the Affordable Care act. Now, the president and the Vice President have also taken executive actions to fight back against state abortion bands that put the health of women in jeopardy, force women to travel out of state for care, and threatened to criminalize doctors. On to the economy for a second, over 14 million jobs have been created under President Biden. Thats every job lost inhe pandemic plus all most 15 million more jobs. And americans have filed a record 15 million applications tota new businesses. At is helping wages and live and wealth. Were also crking down on price gouging by banding jun fees that work saving americans billions of dollars each year. When it comes to our climate the Biden Harris Administration continues to lead and delivern the most ambitious climate agenda in history including a historic agreement at the cop 28 to transition, launching the american climate core to mobilize a new diverse generation of clean energy. Taking bold action to cut emissions across the economy including strong standards to reduce methane production from this is unleashing a manufacturing and clean energy boom. With over six hundred billion dollars in private sector investments since the president took office. President biden and Vice President harris will continue building on this progress that we have made the first two years in the years ahead. And that is how we see our progress has been over the last two years under the Biden Harris Administration. And we are joined now by admiral john kirby who is here to take a few questions on israel, and the deal to bring home wrongfully detained americans from venezuela and the president s call he had earlier today. And with that, admiral . Mr. Kirby good