Supreme Court upholds a tax on foreign income over a business-backed challenge

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By MARK SHERMAN (Associated Press)

WASHINGTON (AP) — The Supreme Court on Thursday upheld a tax on foreign income over a challenge backed by business and anti-regulatory interests, declining their invitation to weigh in on a broader, never-enacted tax on wealth.

The justices, by a 7-2 vote, left in place a provision of a 2017 tax law that is expected to generate $340 billion, mainly from the foreign subsidiaries of domestic corporations that parked money abroad to shield it from U.S. taxes.

The law, passed by a Republican Congress and signed by then-President Donald Trump, includes a provision that applies to companies that are owned by Americans but do their business in foreign countries. It imposes a one-time tax on investors’ shares of profits that have not been passed along to them, to offset other tax benefits.

But the larger significance of the ruling is what it didn’t do. The case attracted outsize attention because some groups allied with the Washington couple who brought the case argued that the challenged provision is similar to a wealth tax, which would apply not to the incomes of the very richest Americans but to their assets, like stock holdings, that now get taxed only when they are sold.

Justice Brett Kavanaugh wrote in his majority opinion that “nothing in this opinion should be read to authorize any hypothetical congressional effort to tax both an entity and its shareholders or partners on the same undistributed income realized by the entity.”

The court ruled in the case of Charles and Kathleen Moore, of Redmond, Washington. They challenged a $15,000 tax bill based on Charles Moore’s investment in an Indian company, arguing that the tax violates the 16th Amendment. Ratified in 1913, the amendment allows the federal government to impose an income tax on Americans. Moore said in a sworn statement that he never received any money from the company, KisanKraft Machine Tools Private Ltd.

A ruling for the Moores could have called into question other provisions of the tax code and threatened losses to the U.S. Treasury of several trillion dollars, the Biden administration told the court.

The case also had kicked up ethical concerns and raised questions about the story the Moores’ lawyers told in court filings. Justice Samuel Alito rejected calls from Senate Democrats to step away from the case because of his ties to David Rivkin, a lawyer who is representing the Moores.

Public documents show that Charles Moore’s involvement with the company, including serving as a director for five years, is far more extensive than court filings indicate.

The case is Moore v. U.S., 22-800.

___

Regan Smith qualifies first in 200 fly at Olympic Trials, final is tonight

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INDIANAPOLIS — Regan Smith of Lakeville followed her record-breaking performance in the 100-meter backstroke final on Tuesday night with a strong effort in the prelims of the 200 butterfly at the U.S. Olympic swimming trials on Wednesday.

Smith, 22, posted the fastest qualifying time in the 200 fly in 2 minutes, 4.91 seconds. Her qualifying time was 1.19 seconds faster than the next best time by Alex Shackell.

Smith set a world record in her specialty, the 100 backstroke, on Tuesday night, with her time of 57.13 seconds easily beating the mark of 57.33 set a year ago by Australia’s Kaylee McKeown.

It all sets up a busy Thursday for Smith. She’ll swim in the 200 backstroke prelims in the morning, and the 200 butterfly is the first final of the night Session.

The 200 backstroke final is Friday night.

Smith could finish the trials with a flourish after an impressive but ultimately disappointing start. On Monday, she registered the fifth-fastest all-time performance in the 100 butterfly in 55.62 seconds but finished third behind Gretchen Walsh and Torri Huske to miss an Olympic berth in the event.

Coming back from lengthy layoffs, American swimming stars Caeleb Dressel and Simone Manuel were eager to claim their first individual events of the Paris Olympics.

Instead, they had to settle for supporting roles.

Dressel finished third in the men’s 100-meter freestyle on Wednesday night, while Manuel touched fourth in the women’s 100 free.

Only the top two will get to swim the events individually in Paris, but Dressel and Manuel will both be part of the 4×100 freestyle relays.

“I think Paris is going to be a blast,” said Manuel, who has endured a long road back after being diagnosed with overtraining syndrome ahead of the Tokyo Games. “It’s a different spot than I’m used to right now with only being a relay swimmer. But it’s my third Olympic team and that’s something that’s really hard to accomplish.”

Potential breakout star Kate Douglass claimed the victory and Huske took the runner-up position, with Walsh also finishing ahead of Manuel.

Dressel, the winner of five gold medals in Tokyo, won’t get a chance to defend his 100 freestyle title after reaching the wall behind Chris Guiliano and Jack Alexy.

“I’m trying to have fun; I am having fun,” Dressel told the crowd of 22,209 on the deck of the temporary pool inside Lucas Oil Stadium. “You don’t know how much it means to me, the love I’m getting from you. It’s been tough.”

Dressel walked away from swimming in the midst of the 2022 world championships, later revealing that he needed an extended break to rediscover his love of the sport.

Dressel failed to even qualify for the 2023 worlds, but his times have improved significantly since last fall. He still has a shot to qualify individually in the 50 freestyle and 100 butterfly — two more events he won at the last Summer Games.

Manuel also has the 50-meter freestyle left on her plate.

In perhaps the surest bet of the meet, Katie Ledecky claimed her third victory with another dominating performance in the 1,500 freestyle, though the time was a bit of a disappointment.

Seventeen-year-old Thomas Heilman won the men’s 200 butterfly, while Matt Fallon touched first in the 200 breaststroke. Both will be first-time Olympians.

Dressel was all smiles as he hugged the guys ahead of him, saying he was pleased to be on the relay that will set its sights on taking down the world record at the Olympics.

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Lakeville’s Regan Smith sets world record in 100 backstroke at U.S. Olympic trials

Nolan Finley: Treat all gun violators the same as Hunter Biden

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If Hunter Biden’s name had been Jim Bob Jones would he have been tried and convicted for lying on a federal firearms purchase form?

In all honesty, I’d say not.

The son of the president is a political target of Republicans hoping to tar his father with the influence peddling schemes that have made Hunter Biden millions. The gun charge was the surest means to assure he became the only presidential offspring in history to be convicted of a felony.

The trial on tax evasion charges that will come later this year, while promising more salacious and damaging testimony, are less certain to deliver a guilty verdict, and may ultimately be avoided with a plea deal.

The gun case was ironclad, as demonstrated by the jury’s speedy return of its verdict. But it doesn’t change the fact that almost no one else who does what Hunter Biden did has had to face the legal consequences.

The president’s son was charged with three violations of federal law for falsifying the form a purchaser must fill out before buying a gun. Hunter Biden failed to disclose his drug addiction, as required, when he bought a handgun from a Delaware dealer in 2018.

In 2019, 27 million background checks were done on gun buyers. Of that number, 478 individuals were reported to federal prosecutors for lying on the form. And just 298 faced charges.

That puts Hunter Biden in rare company and adds credence to the claims that his prosecution was at least in part politically motivated.

But it doesn’t mean he should not have been charged. Just the opposite — the other 180 violators who walked away with not so much as a wrist slap should have been in the courtroom with him.

The federal law Hunter Biden violated was championed by his father when he was in the Senate. It was designed to help answer a key concern of those advocating for more responsible gun policies: How to keep firearms out of the hands of those most likely to abuse them.

Yet, like so many measures passed in response to cries to “do something” about guns, lax enforcement has rendered the screening form requirement largely useless.

In general, gun laws aren’t aggressively enforced. Remember that Anthony McRae, the shooter who killed three students on the Michigan State University campus, was previously arrested on a felony gun charge that would have prevented him from purchasing a firearm. He was allowed to plead down to a misdemeanor.

A Republican-backed law pending in Congress called the Prosecuting Gun Crimes Saves Lives Act would prioritize the prosecution of those who illegally purchase guns. It’s gone nowhere for lack of support by Democrats, who keep pushing for more restrictive gun laws that end up being undermined by progressive or lazy prosecutors.

On the day his son was convicted, President Joe Biden attended an anti-gun rally calling for even more gun laws. He also, disingenuously, said he respected the legal system that convicted his son. Never mind that his Justice Department tried to orchestrate a sweetheart plea deal that would have spared Hunter Biden from facing any consequences.

Hunter Biden may not have been treated the same as others who violated the screening law. But all future violators should be treated the same as Hunter Biden.

Nolan Finley writes a column for the Detroit News.

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Thomas Friedman: American leaders should stop debasing themselves on Israel

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On Nov. 4, 2022, just after the current far-right Israeli government coalition won election, I wrote a column with this headline: “The Israel We Knew Is Gone.” It was meant to be a warning flare about just how radical this coalition is. Many people disagreed. I believe events have proved them wrong — and the situation is now even worse: The Israel we knew is gone, and today’s Israel is in existential danger.

Israel is up against a regional superpower, Iran, that has managed to put Israel into a vise grip, using its allies and proxies: Hamas, Hezbollah, the Houthis and Shiite militias in Iraq. Right now, Israel has no military or diplomatic answer. Worse, it faces the prospect of a war on three fronts — the Gaza Strip, Lebanon and the West Bank — but with a dangerous new twist: Hezbollah in Lebanon, unlike Hamas, is armed with precision missiles that could destroy vast swaths of Israel’s infrastructure, from its airports to its seaports to its university campuses to its military bases to its power plants.

But Israel is led by a prime minister, Benjamin Netanyahu, who has to stay in power to avoid potentially being sent to prison on corruption charges. To do so, he sold his soul to form a government with far-right Jewish extremists who insist that Israel must fight in Gaza until it has killed every last Hamasnik — “total victory” — and who reject any partnership with the Palestinian Authority (which has accepted the Oslo peace accords) in governing a post-Hamas Gaza, because they want Israeli control over all the territory between the Jordan River and the Mediterranean Sea, including Gaza.

And now, Netanyahu’s emergency war Cabinet has fallen apart over his lack of a plan for ending the war and safely withdrawing from Gaza, and the extremists in his government coalition are eyeing their next moves for power.

They have done so much damage already, and yet not President Joe Biden, the pro-Israel lobby AIPAC, nor many in Congress have come to terms with just how radical this government is.

Indeed, House Speaker Mike Johnson and his fellow GOP mischief makers decided to reward Netanyahu with the high honor of speaking to a joint meeting of Congress on July 24. Pushed into a corner, the top Democrats in the Senate and the House signed on to the invitation, but the unstated goal of this Republican exercise is to divide Democrats and provoke shouted insults from their most progressive representatives that would alienate American Jewish voters and donors and turn them toward Donald Trump.

Netanyahu knows that this is all about domestic U.S. politics, which is why his acceptance of the speaking invitation is such an act of disloyalty to Biden — who flew all the way to Israel to hug him in the days after Oct. 7 — that it simply takes your breath away.

No friend of Israel should participate in this circus. Israel needs a pragmatic centrist government that can lead it out of this multifaceted crisis — and seize the offer of normalization with Saudi Arabia that Biden has been able to engineer. This can come about only by removing Netanyahu through a new election — as Senate Majority Leader Chuck Schumer bravely called for in March. Israel does not need a U.S.-sponsored booze party for its drunken driver.

You wonder if the “friends” of Israel have any clue about the nature of its government. This government is not your grandfather’s Israel and this Bibi is not even the old Bibi.

Unlike any previous Israeli Cabinet, this government wrote the goal of annexing the West Bank into the coalition agreement, so it is no surprise that it spent its first year trying to crush the ability of the Israeli Supreme Court to put any check on its powers. Bibi also ceded control over the police and key authorities in the Defense Ministry to Jewish supremacists in his coalition to enable them to deepen settlers’ control over the West Bank. They immediately proceeded to add settlement housing units in the heart of that occupied territory by record numbers to try to block any Palestinian state there.

This nightmare coalition is now in the process of ensuring that ultra-Orthodox young men will not have to serve in this war in equal weight with secular young men and women, who are exhausted by eight months of fighting. The army chief of staff, Lt. Gen. Herzi Halevi, told soldiers in Gaza over the weekend that there “is now a clear need” to draft the ultra-Orthodox to be soldiers to spare another deployment for “many thousands” of less religious reservists.

Israel’s relatively small combat officer corps has been so ground down, I cannot imagine how it could sustain a war in Lebanon.

Add it all up and you see a reckless act of economic, military and moral overstretch — committing 7 million Jews to control more than 7 million Palestinians (including 2 million Israeli Arabs) between the river and the sea in perpetuity.

That would be madness in a time of peace. In a time of war — a low-grade three-front war that could become a high-grade three-front war any day — it is insane. Israel is increasingly alone, because what ally would want to partner with that agenda?

And that is why I agree with every word that former Prime Minister Ehud Barak wrote in Haaretz last week: Israel faces “the most serious and dangerous crisis in the country’s history. It began on Oct. 7 with the worst failure in Israel’s history. And it continued with a war that, despite the courage and sacrifice of soldiers and officers, appears to be the least successful war in its history, due to the strategic paralysis in the country’s leadership.”

Israel, added Barak, a former army chief of staff, is “risking a multifront war that would include Iran and its proxies. And all this is happening while in the background the judicial coup continues, with its goal of establishing a racist, ultranationalist, messianic and benighted religious dictatorship.”

Barak warned that if the current government is allowed to remain in power, Israel will not only find itself stuck in Gaza — with Hamas still able to fight and no Arab partner to help Israel out of there — it will also most likely find itself “in an all-out war with Hezbollah in the north, a third intifada in the West Bank, conflicts with the Houthis in Yemen and Iraqi militias in the Golan Heights and, of course, conflict with Iran itself.”

Every American should worry about that. It is a prescription for the United States to be dragged into a Middle East war to help Israel — which would be a Russian, Chinese, Iranian dream come true.

Indeed, Secretary of State Antony Blinken, who has made eight trips to Israel since Oct. 7, should not make another without Israel and Hamas agreeing to a clear war-ending plan. He is debasing his and U.S. power. This is ultimatum time. Biden should be telling Israel that it should accept Hamas’ key demand: Totally end the war now and withdraw from Gaza in exchange for the return of all Israeli hostages. Israel cannot think straight while Hamas holds its people.

If Israel can end the war in Gaza, it can lead to a U.S.-mediated deal with Hezbollah to quiet the northern border war — which has been terrible for civilians on both sides. It could enable Israelis and Lebanese along their countries’ border to return home while enabling the Israeli army to recover and restock from a draining fight. It could halt the erosion in both Israel’s economy and its global moral standing and let the country do something it should have done on Oct. 8. That is: pause, rethink, strategize and not do exactly what Iran and Hamas wanted it to do — i.e., charge head first just like America did after Sept. 11, 2001 — and sink into an endless war without any plan or partner for the morning after. And, as Barak argued, Israel must then hold new elections.

Yes, yes, I can hear the criticism from the war hawks right now: “Friedman, you would let Hamas’ leader, Yahya Sinwar, come out of his tunnel and declare victory?”

Yes, I would. In fact, I wish I could be at the news conference in Gaza when he does, so I could ask the first question:

“Mr. Sinwar, you claim this is a great victory for Hamas — a total Israeli withdrawal and a stable cease-fire. I just want to know: What existed on Oct. 6 between you and Israel, before your surprise attack? Oh, let me answer that: a total Israeli withdrawal from Gaza and a stable cease-fire. If you don’t mind, I’d like to stick around for a few days to watch you explain to Gazans how you started an eight-month war — causing the destruction of roughly 70% of Gaza’s housing stock and leaving, by your count, some 37,000 Gazans dead, many of them women and children — so you could get Gaza back to exactly where it was on Oct. 6, in a cease-fire with Israel and no Israeli troops here. Another Hamas victory like this and Gaza will be permanently unlivable.”

And to Israelis who would ask, “Friedman, are you crazy, you would let Sinwar run Gaza again?” my answer would again be — yes, for now. The alternatives — Israel running Gaza or Gaza becoming another Somalia — are far worse. Netanyahu’s idea that some perfect Palestinians — who are neither members of Hamas nor the Palestinian Authority — will run the place for Israel is a fantasy.

The only people who can defeat Hamas are the Palestinians of Gaza. They, too, need better leadership, and if they find it, we should help them rebuild. But until then, Israel would be crazy to want to stay in Gaza and be responsible for its reconstruction. That honor should go to Sinwar.

I believe that the morning after the morning after Sinwar emerges from his tunnel, many Palestinians in Gaza will want to pummel him for the disaster he has visited on them. And if not, Sinwar and Sinwar alone will be responsible when the water doesn’t flow, when the building materials don’t arrive, when the sun doesn’t shine — not Israel. And if he is so foolish as to restart the war with Israel or attempt to smuggle in weapons instead of food and housing for his people, it will all be on him.

Sadly, if all this war does is buy Israel another long timeout with Hamas, well, maybe that’s all that’s possible. After all, up to now, the real history of Jews and Palestinians, going back to the early 20th century, has been: war, timeout, war, timeout, war, timeout, war, timeout, war, timeout. And the real difference is what each side did in the timeouts.

Maybe one day that will change, but for now Israel needs to get the hell out of Gaza and back into a timeout.

Thomas Friedman writes a column for the New York Times.

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