PHOENIX – Attorney General Kris Mayes today led a coalition of state attorneys general in submitting an amicus brief to the U.S. Supreme Court, advocating for the Court to uphold the Ninth Circuit's decision on the Mandatory Repatriation Tax (MRT) in Moore vs. the United States. Congress enacted the MRT in 2017 as part of a broad bill that, among other things, cut or eliminated taxes that multinational corporations and other international investors pay on income from their overseas holdings. The MRT offsets this massive tax cut and promotes fundamental fairness by ensuring that hundreds of billions of dollars in cash held by corporations overseas does not escape taxation forever. Attorney General Mayes and the coalition argue that overturning the Ninth Circuit's decision to uphold the tax could have far-reaching economic consequences at the state and federal levels.
"Contrary to what some on the other side have argued, this wasn’t a federal tax grab and it wasn’t a new kind of tax," said Attorney General Mayes. "Lawmakers enacted the MRT because they recognized that multinational corporations would otherwise receive a massive windfall, on top of the rest of the 2017 tax cut. Striking down the MRT would senselessly grant this windfall, potentially requiring hundreds of billions of dollars in tax revenue to be refunded to multinational corporations.”
Attorney General Mayes and the coalition argue that the MRT and similar taxes play an essential role in U.S. tax law by discouraging tax shelters that corporations use to avoid paying taxes, sometimes for years. Many states tax mandatory repatriation income at the state level, and all states rely on the federal government to maintain a rational, fair, and efficient tax system. Striking down the MRT could cause a ripple effect across state economies—especially if the Court goes beyond the narrow facts presented by this case—creating a vacuum of uncertainty and upheaval in the country's financial landscape.
Key arguments made by the coalition:
- Importance of MRT: The MRT and similar taxes are essential to maintaining a strong tax base for both federal and state revenue.
- State Conformity: States rely on federal tax law to shape their state tax codes. If federal law does not discourage tax sheltering, states would be forced to fend for themselves, at massive administrative and compliance cost.
- Potential Fallout: Undermining anti-tax sheltering laws could lead to a substantial decline in federal and state revenue and could incite legal chaos.
Attorney General Mayes and the coalition warn that weakening the MRT and other related tax provisions would significantly disrupt state budgets and financial stability. Moreover, it could compromise the legal framework that currently prevents aggressive tax avoidance, adversely affecting the services funded by these revenues.
To avoid potential economic turmoil, Attorney General Mayes and the coalition urge the Court to consider the broader implications of its ruling. A decision against the MRT could not only deplete essential tax revenue, but also cause a resurgence of tax avoidance schemes, impacting everyone from individual citizens to large institutions. Attorney General Mayes and the coalition urge the Supreme Court to affirm the Ninth Circuit's decision in Moore vs. the United States to help ensure the financial stability of state and national economies.
Attorney General Mayes is joined in submitting the amicus brief by the attorneys general of California, Colorado, Connecticut, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Vermont, and Washington.