The Forgotten Income-Attribution Power
abstract. Economic inequality stands at record levels, and constitutional law haunts egalitarian reform. In 2024, the Supreme Court decided the latest contest. Moore v. United States rebuffed an attempt to sharply limit the federal taxing power, as a razor-thin majority upheld Congress’s attribution of foreign corporations’ income to domestic shareholders. But four Justices criticized the reasoning of the majority, faulting its use of a fabricated doctrine.
This Feature provides a systematic account of Congress’s income-attribution power. It excavates overlooked litigation materials and case law from the infancy of the current federal income tax. In the 1920s and 1930s, litigants attacked, on constitutional grounds, federal taxation of trusts, corporate profits, and marital units in community-property states. The Court rejected all such challenges. It crafted a robust attribution power that allowed Congress broad discretion to tax A on income realized by B, limited only by due process. This account defends the majority’s approach and its application to factual predicates beyond those in Moore. Indeed, the attribution framework allows Congress to design structural tax reform by taxing corporate earnings to shareholders. The Feature thus provides doctrinal and policy insights in an age of increasing judicial intervention in federal taxation.
author. Associate Professor of Law, Emory University. I thank Reuven Avi-Yonah, Paulo Barrozo, Marco Basile, Mary Bilder, Yariv Brauner, Guido Calabresi, David Gamage, Heather Field, William Fletcher, Brian Galle, Daniel Hemel, Christine Kim, Matt Lawrence, Ira Lindsay, Jonathan Nash, Henry Ordower, Amanda Parsons, Jim Repetti, Diane Ring, Kerry Ryan, Blaine Saito, Mark Storslee, Stacie Strong, Anne Tucker, Manoj Viswanathan, Larry Zelenak, and audiences at the 2025 Critical Tax Workshop at the University of Wisconsin Law School, the Emory-UGA Summer Faculty Workshop, the 2025 United Kingdom Society of Legal Scholars Annual Conference at the University of Leeds, the Boston College Law School Faculty Colloquium, the University of California, San Francisco Law School, the St. Louis University School of Law, and the 2025 National Tax Association conference for their insights and feedback, as well as the editors of the Yale Law Journal, especially Michael Nachman, Claire Ren, Joe Servidio, Jeremy Thomas, Matt Beattie-Callahan, and Ako Ndefo-Haven, for their diligence and editorial precision. The content presented here reflects only my personal views.
Introduction
Economic inequality stands at record levels, and constitutional law haunts egalitarian reform.1 At the center lies the specter of realization.2 This doctrine predicates taxation of gain upon the sale or disposition of the underlying asset.3 It allows taxpayers to defer—and upon death, to eliminate—tax liability as long as they hold onto the property during their lifetime.4 For example, Elon Musk pays no tax on the gain of his Tesla stocks until he sells or otherwise exchanges them.5 The realization requirement is a tax-planning technique available to all, but it is especially valuable to high-net-worth taxpayers because they derive a much larger portion of their income from capital appreciation rather than exertion of labor.6 Such elective tax deferral and eventual forgiveness of capital income thus immunize the wealthiest Americans from Congress’s main redistributive tool: the federal income tax.7 Indeed, according to a recent leak of ultrawealthy taxpayers’ returns, realization helped Musk pay no federal income tax in 2018, and it diminished Jeff Bezos’s reportable income so much that he claimed the child tax credit in 2011.8
The value of the realization doctrine has generated intense pressure to make it a constitutional, rather than merely statutory, mandate.9 Such arguments proceed from a complex web of constitutional provisions and judicial interpretation. The 1787 Constitution granted the federal government broad powers to tax. But it required that “Duties, Imposts and Excises” be uniform, and “direct Taxes” be apportioned in accordance with each state’s census population.10 Congress enacted an unapportioned income tax during the Civil War, and the Supreme Court upheld it against a constitutional challenge in 1880.11 But when Congress attempted to tax income during peacetime, the Court shifted course and struck down the federal income tax as an unapportioned direct tax.12 This led to the Sixteenth Amendment. Ratified in 1913, the amendment permitted Congress to tax income, “from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”13
The latest efforts to constitutionalize realization culminated in Moore v. United States, perhaps the most important tax case to reach the Supreme Court in a century.14 There, petitioners asked the Court to hold that the Sixteenth Amendment does not authorize Congress to tax unrealized gains.15 With this ruling—the strategy goes—proposals to tax wealth or accrued appreciation will have to be apportioned under the Direct Tax Clauses of the Constitution.16 In its most straightforward form, apportionment is unfair and politically infeasible.17 Five votes on the Court thus would have doomed structural tax legislation key to ameliorating inequality.18
For now, the Court declined such invitation. Dodging the question presented (whether taxpayers must realize income for federal taxation), a razor-thin majority upheld Congress’s decision to attribute income earned by foreign corporations to their domestic shareholders.19 Writing for the Court, Justice Kavanaugh emphasized the narrow scope of Moore’s holding, saving the battle over the federal taxing power for another day.20 Four Justices—in dissent and concurrence—faulted the majority for inventing an attribution doctrine from thin air.21 They would have constitutionalized the realization requirement as asked, preempting proposed federal wealth and accrual taxes, but fell one vote short.
Moore thus featured a stunning turn,22 raising foundational questions about the unfamiliar framework of attribution.23 For example, beyond the narrow context of Moore itself, to what extent can Congress attribute to one taxpayer income realized by another?24 Can Congress tax Musk based on income earned by Tesla?
This Feature reconstructs Congress’s income-attribution power. It argues that Congress has broad, independent power to tax individuals and entities on income realized by others. The Feature excavates overlooked litigation materials and case law from the infancy of the current federal income tax. During the 1920s and the 1930s, litigants attacked the constitutionality of federal taxation of trusts, excess corporate profits, and marital units in community-property states.25 Litigants relied on the Direct Tax Clauses to contend, before the Supreme Court and lower courts, that Congress could not tax them unless these taxpayers received, controlled, or owned the taxable income.26 The Court rejected all such arguments. It crafted a robust federal attribution power, limited only by the Due Process Clause. If someone has realized an income stream, Congress can tax anyone whose relationship with such income is not arbitrary.27 Armed with this principle, the Hughes Court combatted—with partial success—high-income groups’ tax-avoidance techniques at another time beset by economic inequality.28 Importantly, all these cases, spanning areas of corporate, trust, and marital taxation, contain implicit Sixteenth Amendment holdings.
This vision of Congress’s attribution power thus cabins realization as an obstacle to structural tax reform.29 Attribution allows Congress wider latitude to select the bearer of the tax burden. It would, for example, permit the federal government to tax individuals on their shares of corporate earnings.30 A broad reading of the case law may even allow Congress to design the tax to replicate the economic effects of existing proposals of accrual and wealth taxation.31 Such doctrinal moves are not revolutionary. Indeed, this Feature shows that using definitional glosses on “income” (e.g., as “realized” income only) to limit the federal taxing power is as old as the Sixteenth Amendment itself. It is beyond the scope of this Feature whether “income” for purposes of the Sixteenth Amendment requires realization.32 But it is worth noting that the Supreme Court has rejected efforts to make realization a constitutional mandate in the past. After all, the Sixteenth Amendment is a grant of power to Congress. Today, the Roberts Court should likewise dismiss invitations to cabin Congress’s power to close key tax loopholes.
The Feature thus makes two main contributions. It provides the first study of the constitutional attribution doctrine in a law review since Moore, and one of the only in the past few decades.33 The Feature defends the majority’s approach. It provides the historical and conceptual foundations for extending the use of the attribution doctrine to factual predicates beyond Moore itself. That is, Congress’s income-attribution power is far broader than the “narrow” framing of the majority opinion.34
Second, this analysis yields insights about how to design structural tax reform in an age of growing judicial intervention. The stakes here are high. Rising inequality threatens our democracy and constitutionalism.35 Federal courts have shown increasing confidence—unseen in decades—in asserting a judicial role in crafting tax law.36 Moore itself has generated confusion: while Senator Elizabeth Warren welcomed the decision as encouraging the “fight . . . to tax the rich,”37 the Heritage Foundation declared federal wealth taxes “mostly dead.”38 To be sure, structural tax reform may not be on the table this year. Congress’s 2025 tax legislation was not revolutionary.39 Instead, its most important provisions consisted in extensions of tax cuts introduced in the 2017 tax reform.40 But it is critical that when political momentum returns, the debate proceeds on our democracy’s sense of distributive justice rather than attempts to read limits on the federal taxing power into the Constitution.41 All this necessitates a better understanding of the attribution doctrine.
Three caveats. First, this Feature concerns the attribution power, taking as granted that someone, even if not the taxpayer, has realized income. It is beyond the scope of this Feature whether the Constitution in fact bans or allows the uniform taxation of unrealized income. In a future case, the Supreme Court could, of course, hold that Congress is free to tax unrealized gains or wealth, as scholars and courts have argued.42 However, that possibility is remote given the current composition of the Court. Moore has revealed four votes in favor of a constitutional realization requirement.43 A fifth vote may not be hard to find through persuasion or shifts in judicial personnel. This Feature thus operates in a “second-best” world, while its arguments bolster the virtues of a “first-best” world.44
Second, this Feature concerns the constitutional, not statutory, doctrine of attribution. It goes to Congress’s power to tax, not the construction of what statutory language entails. Statutory assignment of income is the subject of a separate case law, as Part II will clarify.45
Third, this Feature does not take a substantive position on distributive justice. Instead, the intent and the effect of the attribution power are to strengthen the role of democracy in tax policymaking. That is, the Feature does not necessarily endorse a federal wealth or accrual tax, or even recommend that Congress tax corporate earnings at uniform rates to shareholders. Those decisions fall within the realm of democratic judgment, channeled through a political process that reasonably reflects the will of the people as informed by robust discursive infrastructure and constrained by their commitment to foundational norms. But the Feature does contend that the Constitution does not unduly bind our hands in making such decisions. Should Congress decide to ameliorate income and wealth inequality by attributing corporate earnings to shareholders, existing doctrine poses no obstacle.
The remainder of this Feature proceeds as follows. Part I introduces the doctrinal and scholarly background. It analyzes the Justices’ opinions in Moore and the existing literature. Part II defines key terms. It examines litigants’ constitutional arguments in trust, excess-profits, and marriage-taxation cases in the 1920s and the 1930s. In all these cases, taxpayers faulted federal revenue provisions for taxing income that the taxpayers themselves did not realize. The Supreme Court used the attribution doctrine to dismiss these contentions. The Court also subjected federal income attribution to the limits of due process, most prominently a rationality mandate. Part III discusses policy implications. It shows that under the Fifth Amendment, Congress has wide latitude to design a tax system in accordance with our democracy’s vision of distributive justice.
William D. Andrews, a longtime faculty member of Harvard Law School, famously called the realization rule the “Achilles’ heel” of the income tax. William D. Andrews, The Achilles’ Heel of the Comprehensive Income Tax, in New Directions in Federal Tax Policy for the 1980s, at 278, 280 (Charls E. Walker & Mark A. Bloomfield eds., 1983); see also David M. Schizer, Realization as Subsidy, 73 N.Y.U. L. Rev. 1549, 1551 (1998) (describing critics’ views of the realization rule as “an intricate and unwieldy edifice,” “the root of many tax evils,” and “the most intractable problem in the income tax”); Mary Louise Fellows, A Comprehensive Attack on Tax Deferral, 88 Mich. L. Rev. 722, 738 (1990) (arguing that realization “is the source of the tax law’s most serious abuses, inequities, and complications”).
Brian Galle, David Gamage & Darien Shanske, Solving the Valuation Challenge: The ULTRA Method for Taxing Extreme Wealth, 72 Duke L.J. 1257, 1270 (2023) (explaining how realization enables tax deferral and “allows taxpayers to retain the time value of the money they would otherwise owe the government”); I.R.C. § 1014(a) (2024) (providing for stepped-up basis at death and therefore forgiving federal income-tax liability for gains accrued during the decedent’s lifetime); Distribution of Income by Source (2025 Income Levels), U.S. Dep’t of Treas., (2024), https://home.treasury.gov/system/files/131/Distribution-of-Income-by-Source-2025.pdf [https://perma.cc/SEC6-S6P6] (showing the concentration of capital income at the top); Lily Batchelder & David Kamin, Policy Options for Taxing the Rich, in Maintaining the Strength of American Capitalism 200, 202 (Melissa S. Kearney & Amy Ganz eds., 2019) (describing the “tax-focused model of redistribution” in the United States). Scholars have long recognized the inequity of forgiving income-tax liability on gains transferred upon death. See, e.g., Jerome Kurtz & Stanley S. Surrey, Reform of Death and Gift Taxes: The 1969 Treasury Proposals, the Criticisms, and a Rebuttal, 70 Colum. L. Rev. 1365, 1381-82 (1970); Lawrence Zelenak, Taxing Gains at Death, 46 Vand. L. Rev. 361, 363 (1993).
Jesse Eisinger, Jeff Ernsthausen & Paul Kiel, The Secret IRS Files, ProPublica (June 8, 2021), https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax [https://perma.cc/GU7T-YNCE]; Alex Zhang, Fiscal Citizenship and Taxpayer Privacy, 125 Colum. L. Rev. 235, 238-39 (2025) (describing the ProPublica leak); Lawrence A. Zelenak, 1924, 2021: Taxes of the Ultrarich, and Mark-to-Market Reforms, Tax Notes (July 26, 2021), https://www.taxnotes.com/featured-analysis/1924-2021-taxes-ultrarich-and-mark-market-reforms/2021/07/23/76vgy [https://perma.cc/JF35-JB88] (explaining the relatively low tax burden at the top with reference to realization and the ProPublica leak).
E.g., Richard A. Epstein, The Wealth Tax Is a Poor Idea, Hoover Inst. (Jan. 24, 2023), https://www.hoover.org/research/wealth-tax-poor-idea [https://perma.cc/6JCG-QBHP]; Brief of West Virginia and 16 Other States as Amici Curiae in Support of Petitioners at 1-4, Moore v. United States, 602 U.S. 572 (2024) (No. 22-800). Other policymakers (e.g., Elizabeth Warren and Kamala Harris) have proposed abolishing the realization requirement. See Emmanuel Saez & Gabriel Zucman, Progressive Wealth Taxation, Brookings Papers on Econ. Activity, Fall 2019, at 437, 438 (discussing wealth-tax proposals); Billionaire Minimum Income Tax Act, H.R. 8558, 117th Cong. § 1481(a), (c) (2022) (imposing a 20% minimum tax on the “net unrealized gain” of taxpayers whose net worth exceeds $100 million).
Revenue Act of 1864, ch. 173, § 116, 13 Stat. 223, 281 (taxing income at progressive, graduated rates to fund the war effort); Springer v. United States, 102 U.S. 586, 602 (1880) (upholding the Civil War income tax against the charge that it was an unapportioned direct tax in violation of Article I of the Constitution). The Revenue Act of 1864 also taxed undistributed corporate earnings to the shareholders—a provision structured like the mandatory repatriation tax at the center of the Moore litigation, and which the Supreme Court upheld in 1870. See Revenue Act of 1864, § 117, 13 Stat. at 282 (including as income “the gains and profits of all companies . . . [to which the taxpayer was] entitled[,] whether divided or otherwise”); Collector v. Hubbard, 79 U.S. (12 Wall.) 1, 18 (1870) (upholding the tax); infra notes 458-469 and accompanying text (discussing the relationship between Hubbard and Moore).
602 U.S. 572 (2024); see also John R. Brooks & David Gamage, The Original Meaning of the Sixteenth Amendment, 102 Wash. U. L. Rev. 1, 23 (2024) (discussing opposition to taxing wealth or unrealized gains); Michael J. Graetz, To Avoid the Moore Morass, the Court Should DIG It—But It Probably Won’t, 181 Tax Notes Fed. 1253, 1261 (2023) (“Any holding by the Court that realization is a constitutional requirement . . . would undermine a century of income tax decisions and amendments to the tax law.”).
However, as Justice Jackson explains in her concurrence, this reasoning is incomplete. Even if the Sixteenth Amendment authorizes Congress to tax realized income only, the Moore petitioners would still need to make the additional showing that a tax on unrealized gains is a “direct tax” (e.g., as opposed to an excise) within the meaning of the Constitution. Moore, 602 U.S. at 602-03 (Jackson, J., concurring); see also U.S. Const. art. I, § 9, cl. 4 (“No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.”); John R. Brooks & David Gamage, Taxation and the Constitution, Reconsidered, 76 Tax L. Rev. 75, 149-50 (2022) (conceptualizing proposed federal wealth taxation as an excise); Alex Zhang, Rethinking Eisner v. Macomber, and the Future of Structural Tax Reform, 92 Geo. Wash. L. Rev. 179, 187 (2024) (explaining that prevailing on the Sixteenth Amendment question is only a first step for the Moore petitioners). In addition, wealth and accrual taxation may confront distinct modes of constitutional scrutiny. Wealth taxation imposes ad valorem burdens and is a form of property taxation. Accrual taxation imposes burdens on unrealized income—for example, rises in the value of appreciated stocks. As a result, Congress may have the power to tax accrual under the Sixteenth Amendment. But it is unlikely that Congress has the power to impose a tax on property value (i.e., wealth) under the Sixteenth Amendment unless it is designed at least in the form of an income tax.
This is because Article I requires apportionment by each state’s census population. Due to the uneven distribution of income and wealth, residents in wealthier states would face a much lower tax burden than those in poorer states. Scholars have suggested interstate and fiscal-equalization mechanisms to ameliorate the unfairness of apportionment but recognize that they are “cumbersome.” Brooks & Gamage, supra note 16, at 81-82, 156.
Before the briefing on the merits, few expected the Court to resolve Moore on the basis of income attribution. See Petition for Writ of Certiorari, supra note 15, at 2 (petitioning for a writ of certiorari based on realization rather than attribution). Compare Brief for the United States in Opposition at 2, Moore, 602 U.S. 572 (No. 22-800) (opposing certiorari primarily on the ground that the Constitution imposes no realization requirement), with Brief for the United States at 29, 44, Moore, 602 U.S. 572 (No. 22-800) (arguing on the merits that Congress can attribute realized entity income to shareholders), and Brief for the American Tax Policy Institute as Amicus Curiae in Support of Respondent at 5, Moore, 602 U.S. 572 (No. 22-800) (emphasizing that the Moore dispute does not turn on realization but attribution). Justice Gorsuch found the turn to attribution as a litigation strategy so unexpected that he suggested that the government had waived the argument by not raising it before. Transcript of Oral Argument at 79-81, 106, Moore, 602 U.S. 572 (No. 22-800).
That is, a constitutional realization rule—assuming it exists—does not require that the income taxed bear any relationship (e.g., receipt, ownership, or control) with the taxpayer. Several scholars have discussed the content of realization and attribution. See generally, e.g., Ari Glogower, Taxing Capital Appreciation, 70 Tax L. Rev. 111 (2016) (realization); David J. Shakow, Taxation Without Realization: A Proposal for Accrual Taxation, 134 U. Pa. L. Rev. 1111 (1986) (same); Deborah H. Schenk, A Positive Account of the Realization Rule, 57 Tax L. Rev. 355 (2004) (same); W. Lewis Roberts, Recent Decisions Involving Attribution of Income for Tax Purposes, 25 N.Y.U. L. Rev. 810 (1950) (attribution and assignment of income); Stanley S. Surrey, Assignments of Income and Related Devices: Choice of the Taxable Person, 33 Colum. L. Rev. 791 (1933) (same); infra note 33 (collecting additional scholarship).
Most scholarship on the relationship between realization and constitutional income attribution (i.e., rather than statutory assignment of income) comes from the 1950s. See, e.g., L. Hart Wright, The Effect of the Source of Realized Benefits upon the Supreme Court’s Concept of Taxable Receipts: A Chronological Study, 8 Stan. L. Rev. 164 (1956); Lloyd George Soll, Intra-Family Assignments: Attribution and Realization of Income (First Installment), 6 Tax L. Rev. 435 (1951); Lloyd George Soll, Intra-Family Assignments: Attribution and Realization of Income (Second Installment), 7 Tax L. Rev. 61 (1951). One recent contribution, Brant J. Hellwig, The Supreme Court’s Casual Use of the Assignment of Income Doctrine, 2006 U. Ill. L. Rev. 751, focuses on the relationship between realization and statutory assignment of income rather than constitutional tax law. The Moore case has started generating more general commentary on the federal taxing power. See, e.g., Ari Glogower, The Constitutional Limits to the Taxing Power, 93 Fordham L. Rev. 781, 785-90 (2024). See generally infra Section I.B (surveying the existing literature).
Rosalind Dixon & Julie Suk, Liberal Constitutionalism and Economic Inequality, 85 U. Chi. L. Rev. 369, 371-74 (2018); Joseph Fishkin & William Forbath, Reclaiming Constitutional Political Economy: An Introduction to the Symposium on the Constitution and Economic Inequality, 94 Tex. L. Rev. 1287, 1292-93 (2016).
The Supreme Court has not struck down a federal income-tax provision as unconstitutional for more than a century, since Eisner v. Macomber, 252 U.S. 189, 219 (1920). Reuven Avi-Yonah, Should U.S. Tax Law Be Constitutionalized? Centennial Reflections on Eisner v. Macomber (1920), 16 Duke J. Const. L. & Pub. Pol’y 65, 67 (2021). The Court has invalidated non-income-tax federal revenue laws. E.g., United States v. IBM Corp., 517 U.S. 843, 863 (1996) (holding that the Export Clause, U.S. Const. art I, § 9, cl. 5, prohibits Congress from imposing a nondiscriminatory tax on premiums paid to foreign insurers on exports).
Abbie VanSickle & Jim Tankersley, Supreme Court Upholds Trump-Era Tax Provision, N.Y. Times (June 20, 2024), https://www.nytimes.com/2024/06/20/us/politics/supreme-court-tax-case-trump.html [https://perma.cc/J4N8-ZZZU].
GianCarlo Canaparo, After Moore v. U.S., Wealth Taxes Are Only Mostly Dead, Heritage Found. (July 17, 2024), https://www.heritage.org/courts/commentary/after-moore-v-us-wealth-taxes-are-only-mostly-dead [https://perma.cc/S67P-DR8B].
And political momentum may return in unexpected ways: let us not forget that Donald Trump (prior to his presidency) had proposed in 1999 a 14.25% wealth tax to raise $5.7 trillion to repay the national debt. See Brandon Lecoq, The Time Donald Trump Proposed a $5.7 Trillion Wealth Tax, Tax Found. (June 18, 2015), https://taxfoundation.org/blog/donald-trump-wealth-tax [https://perma.cc/7GF3-7NM7].
E.g., Brooks & Gamage, supra note 14, at 6 (arguing that the Sixteenth Amendment was designed to restore Congress’s plenary taxing power to its status before Pollock v. Farmers’ Loan & Tr. Co., 157 U.S. 429 (1895), aff’d on reh’g, 158 U.S. 601 (1895)); Brooks & Gamage, supra note 16, at 84, 156 (categorizing properly designed federal taxes on wealth and unrealized gains as “excises” which the Constitution permits at uniform rates); Ari Glogower, A Constitutional Wealth Tax, 118 Mich. L. Rev. 717, 720-23 (2020) (contending that the Supreme Court should uphold a traditional wealth tax because Congress can use wealth-integration methods to achieve similar effects); Dawn Johnsen & Walter Dellinger, The Constitutionality of a National Wealth Tax, 93 Ind. L.J. 111, 137 (2018) (“The wealth tax debate should proceed on its merits, unencumbered by a pernicious legacy of constitutional missteps.”). For different views, see, for example, Amandeep S. Grewal, Billionaire Taxes and the Constitution, 58 Ga. L. Rev. 249, 297-310 (2023); David M. Schizer & Steven Gow Calabresi, Wealth Taxes Under the Constitution: An Originalist Analysis, 77 Fla. L. Rev. 1401, 1406-14 (2025); and Joseph Bankman & Daniel Shaviro, Piketty in America: A Tale of Two Literatures, 68 Tax L. Rev. 453, 489-92 (2015).