A legal case could overhaul the income tax system as we know it.

I'm David Brancaccio in New York.

The Supreme Court today hears oral arguments that could determine the broad question of what money Congress can tax or not tax.

It's a case with wide implications, including how a wealth tax might be deployed in America,

Marketplace's Novaafo explains.

The challenge comes from Charles and Kathleen Moore, who paid $15,000 in tax

over an investment in a foreign business in India.

The Moors say they never actually received income from their investment, what

tax experts call realized gains. They're asking the Supreme Court to a rule that they should

never have been taxed at all.

It's a pretty far-fetched request.

Mindy Herzfeld teaches tax law at the University of Florida.

Far-fetched because there are a whole host of tax rules

which impose levies on either direct income or investment gains in

corporate profits. The code today doesn't operate on a strict cash-based receipt

of income principle but depending on how the court rules in this case that's

what it could turn into and that would restrict Congress's taxing authority

ironically business groups and conservatives supported the imposition of the tax in question. It was part of the

2017 tax reform law passed by congressional Republicans. Now many of those groups are supporting

the Moors. So what changed? But no billionaire should be paying a lower

tax rate than a school teacher or a firefighter. President Biden has been pushing for

a tax on wealth, including on unrealized gains on assets and investments.

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