Congress has long treated some corporations and partnerships as pass-throughs, where it attributes the undistributed income of the entity to the shareholders or partners and then taxes the shareholders or partners on that income. These taxes are valid. A 1962 law, known as subpart F, attributes certain income, mostly passive income, of American-controlled foreign corporations to their American shareholders and then taxes those shareholders on that income. Congress generally does not directly tax foreign corporations, including American-controlled foreign corporations, on the income that they earn outside of the United States. Congress has imposed some taxes on the income of those corporations on a pass-through basis. In 2017, Congress passed the Tax Cuts and Jobs Act. Congress imposed a one-time, backward-looking, pass-through tax on some American shareholders of American-controlled foreign corporations to address the trillions of dollars of undistributed income that had been accumulated by those foreign corporations over the years. The MRT imposed a rate from 8 to 15.5 percent on the pro rata shares of American shareholders. In 2006, Ps invested $40,000 in an American-controlled foreign corporation that one of their friends had started in India. In return, the Moores received a 13-percent ownership share. The company, KisanKraft, generated a great deal of income. But as of 2017, KisanKraft had not distributed that income to its American shareholders, including Ps, meaning that neither KisanKraft nor the Moores had paid U.S. taxes on that income. The MRT applied to Ps. Ps declared $132,512 in income under the MRT based on their KisanKraft shares. They owed $14,729 in taxes on that income. Ps paid and sued for a refund. Ps argued that the MRT violated the Direct Tax Clause of the Constitution because it was an unapportioned direct tax on their shares of KisanKraft stock. They claimed that the MRT violated the Due Process Clause of the Fifth Amendment because it applied retroactively to past income. The District Court dismissed the suit, and the U. S. Court of Appeals for the Ninth Circuit affirmed. The Court of Appeals held that the MRT constitutes a tax on income within the meaning of the Constitution because “KisanKraft earned significant income, and the MRT assigns only a pro-rata share of that income to Ps.” Ps appealed.

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