The Supreme Court on Tuesday will hear oral arguments in what is potentially the biggest tax case of this session, Moore v. United States, a case that could preemptively outlaw a wealth tax and reshape America’s tax system.

The case is centered around a one-time repatriation tax levied on money and assets brought back into America from overseas if and when companies choose to do so.

As part of the 2017 Tax Cuts and Jobs Act passed during the Trump administration, the top marginal tax rate for repatriated cash was cut to 15.5 percent, and the top marginal tax rate for non-cash assets was cut to 8 percent. Previously, the top marginal tax rate was 35 percent for both.

The tax cut was aimed at getting American companies to repatriate their assets instead of holding them in accounts overseas, and included provisions that made the tax payments easier by allowing them to be paid in installments over eight years.

In Moore, plaintiffs Charles and Kathleen Moore are suing the federal government for the repatriation taxes that they paid on income from their stake in an Indian tool manufacturing company. They argue that the tax is unconstitutional.

According to the Moores, they did not technically receive any earnings, like dividends, from their investment in the company and should not have to pay taxes as a result.

“Petitioners Charles and Kathleen Moore realized nothing on the investment for which they were subject to liability under the Mandatory Repatriation Tax,” a filing by the Moores reads. “The MRT taxes them and others not because they realized income, but because they owned shares in certain corporations on a certain date.”

The Moores are hoping to get the Supreme Court to reverse a lower court decision that found they owed taxes and “affirm that unrealized gains are not income.”

The Moores’ argument hinges on an interpretation of the 16th Amendment, which states, “Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The Moores assert that existing precedent and practice all “dictate that Sixteenth Amendment ‘incomes’ require realization,” which, if the high court agrees, would render the repatriation tax and other taxes like it unconstitutional.

Although the scope of the effects of the ruling will depend on the specific findings of the court, the case has the potential to preemptively ban a wealth tax and to affect the way that the wealthiest Americans are taxed.

While most Americans work for a wage or salary and pay taxes accordingly, Americans in the upper echelon of wealth often avoid income taxes through a strategy known colloquially as “Buy, Borrow, Die.”

The “Buy, Borrow, Die” method allows the wealthiest Americans to avoid paying income taxes by taking out low-interest loans using large investment portfolios as collateral, thus never realizing their gains and avoiding income taxes.

One proposal from Democrats, like Senator Warren, aims to end this tax avoidance strategy by imposing a tax on the assets, or wealth, of the wealthiest Americans. Ms. Warren and company want to tax unrealized income, such as the appreciated value of someone’s home, even if they haven’t sold the home or pocketed any of those gains. 

Ms. Warren’s “Ultra-Millionaire Tax” proposal would include a 2 percent annual tax on the wealth of households with net worths between $50 million and $1 billion and a 4 percent additional tax on households with net worths more than $1 billion.

According to Ms. Warren’s proposal, such a tax would only affect the wealthiest 0.1 percent of households — about 75,000 altogether — and bring in around $3.75 trillion in revenue over a 10-year period.

The potential effects of the Moore case, though, are not limited to theoretical future tax policies. Organizations like the Tax Foundation have warned that Moore could have drastic effects on government revenue under existing tax schemes.

A Tax Foundation analysis found that a minimalist victory for the Moores — the court striking down the repatriation tax narrowly — would reduce government revenue by about $3.5 billion over 10 years.

A more maximalist ruling by the court could result in a decline in federal revenue of nearly $5.7 trillion over a 10-year period. 

“The Moore v. United States case could have a substantial impact on U.S. tax policy and revenue. It could invalidate some current U.S. tax policies, and a broad ruling could stretch far beyond the provision contested by the plaintiffs,” Tax Foundation analysts Daniel Bunn, Alan Cole, William McBride, and Garrett Watson write. “The size of the impact hinges on the scope of the Court’s ruling.”

While it’s impossible to divine how the Supreme Court will rule on the topic, it’s clear that conservative groups are eager to both preempt a wealth tax and potentially gut some of America’s tax system, with a litany of conservative think tanks and interested parties filing amicus curiae briefs in the case.