New Video: Kathleen and Charles Moore on Why the Supreme Court Should Hear their Challenge to Tax on Unrealized Gains

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“If you haven’t received any income, how can you be required to pay income taxes?” The question, asked by Charles Moore in a new video from the Competitive Enterprise Institute, is the central thrust of a challenge he and his wife, Kathleen, made against the Mandatory Repatriation Tax, a provision of the 2017 tax reform bill. This provision taxes U.S. citizens on certain accumulated foreign earnings of foreign corporations going back 30 years, even if the earnings have not been distributed.

The husband and wife taxpayers from Washington state argue that the tax violates the Constitution’s requirement that direct federal taxes must be apportioned among the states.

In 2019, the Moores challenged the Mandatory Repatriation Tax in District Court in Washington, where the court granted a government motion for summary judgment. The couple appealed that decision to the Ninth Circuit Court of Appeals, where in 2022 a three-judge panel affirmed the district court’s ruling.

CEI and the Moores requested an en banc hearing of the full Ninth Circuit, but the court declined to re-hear the case. Judge Bumatay, joined by judges Ikuta, Callahan, and VanDyke, thought the panel decision should be reconsidered because the Ninth Circuit had “become the first court in the country to state that an ‘income tax’ doesn’t require that a ‘taxpayer has realized income’ under the Sixteenth Amendment.” And that the panel decision “open[s] the door to expansion of the federal taxing power beyond the limits placed by the Constitution,” including “taxes on all sorts of wealth and property without the constitutional requirement of apportionment.”

Later this month, the Moores will appeal their case to the Supreme Court, hoping to get a hearing at the highest court in the land. 

In the CEI video, the Moores share the story of how they invested in a foreign company, KisanKraft, founded by a friend that provides agricultural equipment to underserved small farmers in India.

Charles Moore: KisanKraft is a company in India, essentially founded by myself as a small investor and my friend Ravi Agarwal. Ravi and I met at Microsoft. Ravi as a friend coming to me and saying, I have this idea for this business in India and I need to raise money to get it started. Would you be willing to invest?

                                Surprisingly to me, I was the only person who said yes. Well, we were the only people who said yes.

                                Well, KisanKraft, supplying power tools to Indian farmers. If Indian farmers could be made more productive by bringing power tools to them that are suitable for their types of farms, that would be great.

And they share their experience when they learned the IRS was demanding $15,000 in income tax from their investment in KisanKraft.

Charles Moore: It was a huge emotional return. Every time Ravi and I talked about how things were going at KisanKraft, I was like, wow, we are making a difference here to Indian farming. And in the lives of Indian farmers. And then I get this message on our answering machine in which Ravi says, Charles, we need to talk about the Section 965 transition tax.

                                Give me a call back and I’m like, What? The section 965 transition tax. What the heck is that? If you haven’t received any income, how can you be required to pay income taxes? The bill I received was for $15,000 additional income tax owed. I had received nothing from KisanKraft, zero, no return whatsoever.

Kathleen Moore: Well, it’s never good to get something in the mail from the IRS. You know, it makes your heart pound.

And learn in their own words why Charles and Kathleen Moore felt they needed to challenge the provision.

Charles Moore: Well, Ravi and I discussed this quite a bit, and it seemed to both of us unconstitutional.

Kathleen Moore: Well first, there’s not being sure you want to be a litigant against the IRS. And I think I was probably a little more reluctant. We kept thinking someone else would challenge it – someone bigger and – with more money at stake, right?

Charles Moore: Yes, exactly.

Kathleen Moore: Just because of worrying about getting on their radar, you know, in their sights. You know, you just really want to keep a low profile and not have them interested in you. But Charles persuaded me that it was important and we should do this.

Charles Moore: We are doing this because we strongly believe in the rule of law in this country. And what I would like to see happen is that the court looks at this and says, right, this is not constitutional. The Moore’s have not received an income. How can they be taxed if they have not received any income?

To learn about Charles and Kathleen Moore’s challenge to the Mandatory Repatriation Tax provision of the 2017 tax reform law, please visit

CEI Case page:

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