Alito Urged to Recuse From Case That Could Preemptively Ban Federal Wealth Tax

U.S. Supreme Court Justice Samuel Alito is facing growing calls to recuse himself from a case that could hamstring Congress' ability to enact a federal wealth tax, a policy that progressive lawmakers and economists say is needed to rein in out-of-control inequality.

Late last week, Democrats on the Senate Judiciary Committee sent a letter urging Chief Justice John Roberts to "take appropriate steps to ensure that Justice Alito will recuse himself" from Moore v. United States, which the Supreme Court recently agreed to take up.

The lawmakers' demand was prompted by a friendly interview that Alito gave to The Wall Street Journal's opinion section, which in June allowed the right-wing justice to get out in front of a ProPublica story on his luxury trip with billionaire hedge fund titan Paul Singer.

The interview late last month was conducted in part by David Rivkin Jr., an attorney who is representing the plaintiffs in Moore v. United States. The case, which is mentioned in passing in the Journal's write-up of the Alito interview, concerns whether unrealized gains such as stock appreciation can be subject to federal taxation.

Unrealized gains are currently untaxed in the U.S., allowing billionaires such as Tesla CEO Elon Musk to accumulate massive fortunes while paying little to nothing in federal income taxes.

Supporters of the Moore plaintiffs, who are specifically challenging an obscure foreign earnings provision in the 2017 Republican tax law, have encouraged the Supreme Court to explicitly address the constitutionality of wealth taxes in its ruling.

"This case presents the court with an ideal opportunity to clarify that taxes on unrealized gains, such as wealth taxes, are direct taxes that are unconstitutional if not apportioned among the states," the right-wing Manhattan Institute argued in a May amicus brief. (Proponents of a tax on unrealized gains, such as Sen. Ron Wyden (D-Ore.), have expressed confidence that such a tax is constitutional.)

The Manhattan Institute is chaired by Singer, whose private jet flew Alito to an Alaska fishing trip that the justice did not disclose.

"Alito needs to recuse himself from the case deciding the constitutionality of a wealth tax," Americans for Tax Fairness, a progressive advocacy group, said Wednesday. "First he accepted lavish gifts from billionaires and failed to disclose them. Then he gave a buddy-buddy interview to one of the case's anti-wealth tax lawyers. Enough."

In their letter last week, Senate Democrats argued that Alito violated the Supreme Court's narrow ethical principles by agreeing to sit for an interview with an attorney with business before the court.

"Mr. Rivkin's access to Justice Alito and efforts to help Justice Alito air his personal grievances could cast doubt on Justice Alito's ability to fairly discharge his duties in a case in which Mr. Rivkin represents one of the parties," the senators wrote. "Recusal in these matters is the only reasonable way for Justice Alito to prevent further damage to public confidence in the court."

It is unlikely that Roberts or Alito will agree to the lawmakers' demands, given that both justices have cast doubt on Congress' power to oversee and regulate the Supreme Court.

"This episode again illustrates why legislation establishing stronger, enforceable ethics standards for the court is of paramount importance," the senators' letter concludes. "The court is mired in an ethical crisis of its own making, yet its only response has been a weak statement on ethics that Justice Alito has apparently ignored. It is unacceptable for the highest court in the land to have the lowest ethical standards, and because the court has abdicated its responsibility to establish its own standards, Congress must act."