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Writing in the Wall Street Journal, Ilya Shapiro warns of the dire consequences that are likely to arise if the U.S. Supreme Court rules that unrealized capital gains are taxable income. Two slices:

Imagine receiving a tax bill for the appreciation on your investments, including the equity in your home, before you’ve even sold them. It could happen if the government has its way at the Supreme Court.

During Tuesday’s oral arguments in Moore v. U.S., the justices focused on the question of whether the 16th Amendment’s authorization of “income” taxes allows for the taxing of unrealized gains. It has long been understood that income taxes apply only to realized gains—those that have been actually received by the taxpayer, or effectively so such that the taxpayer has control over the funds, which is called “constructive realization.”


Solicitor General Elizabeth Prelogar told the justices that the “ordinary conception of income” means any “economic gain between two points in time.” Ms. Prelogar encouraged the justices “to not rely on concerns about . . . far-fetched hypotheticals” as to what sort of taxes this position might justify, like a tax on home appreciation.

But concerns about the limits of the government’s position aren’t hypothetical. If the court holds that the realization of income isn’t required for purposes of the 16th Amendment, the necessary implication will be that the tax code already reaches all unrealized gains.

Also warning of the looming danger if the government prevails in Moore v. U.S. is the Wall Street Journal‘s Editorial Board. Two slices:

The real danger is the Justices will blow up the Constitution’s limits on Congress’s taxing power. While the case involves a discrete provision of the 2017 tax reform, Solicitor General Elizabeth Prelogar acknowledged Tuesday that a ruling for the government could open the door to a wealth tax.


Or as Justice Samuel Alito asked: “What about the appreciation of holdings in securities by millions and millions of Americans, holdings in mutual funds over a period of time without selling the shares in those mutual funds?” Ms. Prelogar replied: “I think if Congress actually enacted a tax like that, and it never has, that we would likely defend it as an income tax.”

There you have it. The Biden Administration believes the Sixteenth Amendment lets Congress tax the unrealized appreciation of assets. As Justice Neil Gorsuch noted, when the Supreme Court opens a door, “Congress tends to walk through it.” The Justices should close the wealth-tax door.

George Will intelligently pokes fun at Elizabeth Warren’s and the FTC’s worries over Big Sandwich. Two slices:

Perhaps to inflate the specter of a sandwich shop monopoly, the FTC is considering diminishing the number of such shops by semantic fiat — by decreeing that a sandwich made of beef or chicken is not a sandwich if the meat is not served cold. Thousands of McDonald’s and Chick-fil-A’s would be defined out of the sandwich business. And scores of thousands of other shops selling hamburgers, and chicken or fish sandwiches would disappear from the calculations. The Agriculture Department, however, says that hamburger or chicken between bread is — drum roll — a sandwich.

America is so thickly planted with fast food stores that in many places you cannot fling a brick without hitting one. In addition, there are about 43,000 U.S. food trucks, according to IBISWorld industry research, many of them selling what even the FTC would recognize as sandwiches. Most of New York City’s approximately 13,000 bodegas (a.k.a., corner grocery stores) sell them.

Sandwich vendors also compete with sellers of pizzas, tacos and items from Chopt, Panda Express, etc. Yet Warren surveys the crowded landscape of U.S. sandwich commerce and trembles about a potential monopoly.


By urging the FTC to devote resources to fending off a sandwich shop monopoly, Warren contributes to the public stock of harmless hilarity, making busybody progressivism more amusing than annoying. And she encourages the FTC to divert to Big Sandwich some meddlesomeness that might otherwise be used for more consequential mischief.

The current FTC’s apparent belief, and Warren’s, is that when an enterprise (Apple, Google, etc.) becomes big by satisfying many customers, these customers have created something worrisome. Hence the itch to combat the chimera of Big Sandwich, even though there is not, and can never be, any such thing.

Charles Cooke interviews Russ Roberts.

My Mercatus Center colleague Liya Palagashvili summarizes the findings of her forthcoming study on some employment effects of California’s AB5. A slice:

Our results show that self-employment and overall employment decreased post-AB5. We find no robust evidence that traditional employment increased post-AB5.

Overall our findings suggest that AB5 did not simply alter the composition of the workforce as intended by lawmakers, with more workers becoming employees and fewer workers as independent contractors. Instead, our findings suggest that AB5 is associated with a significant decline in self-employment and overall employment.

Good for Sen. Rand Paul! And for David Henderson.

Wise thoughts from Arnold Kling.

Colin Grabow explains how protectionism artificially increases the costs of energy.

Bob Graboyes argues that “paradoxically, the sinking fortunes of both men [Bejamin Netanyahu and Mahmoud Abbas] could provide a rare opportunity to transform for the better both their places in history and the fortunes of their respective peoples.”