The Supreme Court spent much of Tuesday morning beating up Andrew Grossman, a lawyer asking the justices to revive a long-defunct limit on Congress’s ability to levy taxes.

The case Grossman was arguing, Moore v. United States, is widely viewed as a preemptive strike on wealth taxes — that is, taxes that target the stockpiled wealth of very rich people and that don’t simply tax the income rich people earn off of their wealth.

During her 2020 presidential campaign, Sen. Elizabeth Warren (D-MA) proposed a 2 percent wealth tax on Americans worth over $50 million, but neither Warren’s proposed tax nor anything similar has ever become law, and there’s no chance that it will become law so long as Republicans control at least one house of Congress.

In any event, most of the justices appeared extraordinarily skeptical of Grossman’s arguments, and of the idea that the Court should revive a long-discredited limit on the federal government’s taxing power which the Court briefly embraced during its Lochner Era — an age where the justices regularly signed onto dubious legal arguments that protected capital from taxes and from workplace regulation.

Only Justices Samuel Alito and Neil Gorsuch appeared to have any sympathy at all for Grossman’s attacks on Congress’s power to tax investors. And, while both men threw a barrage of hostile questions at Solicitor General Elizabeth Prelogar, Alito and Gorsuch’s colleagues seemed uninterested in humoring them.

At one point, Justice Brett Kavanaugh, a Republican, interrupted Alito to ask Prelogar a softball question — a clear sign that Kavanaugh was unpersuaded by Alito’s arguments. At another point, Justice Amy Coney Barrett, another Republican appointee, cut off a similar line of questions by Gorsuch.

All of this said, the Court did spend a considerable amount of time while Prelogar was arguing the government’s case hunting around for a way to decide the Moore case narrowly. It is possible that the Court upholds the specific tax at issue in the Moore case on such narrow grounds that the justices could leave the door open to striking down a Warren-style wealth tax at some future date.

But fiscal policy wonks who feared that Moore could blow a massive hole in the federal government’s finances can probably heave a sigh of relief. At the end of the day, Grossman’s arguments appeared to be too weak, and too rooted in discredited legal theories that the Court abandoned nearly a century ago, to persuade even this very conservative Supreme Court.

What is the specific issue before the Court in Moore?

The full array of legal issues in Moore is dizzyingly complex. To completely understand the case, someone must have a working knowledge of how tax accounting typically works, how it works for certain investors who are taxed differently than others, how the Court once read a provision of the Constitution enacted to preserve a Union between free states and slaveholders to protect investors from taxes, and why the United States amended its Constitution to restore the federal government’s ability to tax investment income. (I explain all of these details here.)

But the shortest explanation of what’s at issue in Moore is that it asks whether the Constitution prohibits Congress from taxing investment income before that income is “realized” — meaning that the investor has sold an asset for a profit or otherwise disposed of that asset.

Ordinarily, investors are not taxed right away when their assets gain value. If an investor buys $5,000 worth of stock, for example, and holds onto it for 10 years until its value grows to $25,000, they will pay no taxes at all on that stock during that 10-year period. If they then sell the stock for its $25,000 market value, they will pay taxes on the $20,000 in profit they made.

As the Supreme Court explained in Helvering v. Horst (1940), this ordinary rule — the rule that investments are not taxed until they are sold or otherwise realized — is “founded on administrative convenience.” It is often difficult to determine how much an asset is worth before it is sold, so delaying taxation until realization prevents a situation where no one can be sure how much a particular taxpayer owes the government.

The specific tax at issue in Moore is a one-time tax, enacted as part of the Tax Cuts and Jobs Act of 2017, in order to partially offset the cost of a large tax break that law gave to corporations.

Before this 2017 bill became law, the United States attempted to tax US corporations’ overseas income. Under the old regime, however, corporations could defer taxation of their foreign profits indefinitely by creating a foreign subsidiary. Income earned by these foreign subsidiaries would not be taxed until it was repatriated into the United States, giving companies a strong incentive to hoard money overseas and away from US tax collectors.

The 2017 law largely gave up on trying to tax this overseas corporate income. But it also imposed a one-time tax on US investors in foreign corporations in order to offset some of the lost revenue resulting from the new tax regime. Under this offset, certain investors in foreign corporations must pay a percentage of the money that the corporation has kept overseas, even though the investor has not sold their stock or received any of that money as a dividend.

This one-time tax is expected to raise $340 billion.

The plaintiffs in Moore are US investors in a company that provides supplies to farmers in India. In 2017, they paid an additional $14,729 in taxes due to the one-time provision. They then sued to get this money back, claiming that the Constitution forbids the federal government from taxing unrealized income.

So how is the case likely to be decided?

Grossman’s core argument is that the Supreme Court’s decision in Eisner v. Macomber (1920), which held that “enrichment through increase in value of capital investment is not income in any proper meaning of the term,” outright forbids Congress from taxing unrealized income. And, if Grossman had made this argument a century ago, he’d have a really strong case.

But we are no longer living in the 1920s, and the Supreme Court has repudiated Macomber so many times that, near the end of the argument, Justice Ketanji Brown Jackson suggested that maybe the best thing the Court could do is to explicitly overrule that decision.

Among other things, the Supreme Court said in Commissioner v. Glenshaw Glass (1955), that Macomber’s narrow definition of “income” was “not meant to provide a touchstone to all future gross income questions.” And Glenshaw Glass was only one of the Court’s decisions casting doubt on Macomber. In 1954, one year before Glenshaw Glass was decided, a federal appeals court said that Macomber “has been limited to its specific facts.”

Moreover, as both Justices Sonia Sotomayor and Barrett pointed out to Grossman, the current tax code is absolutely riddled with provisions that tax unrealized income, in violation of the rule that the Court briefly embraced in Macomber. These include provisions taxing partners on a partnership’s income, even if that money hasn’t yet been distributed to the individual partners, as well as taxes governing entities such as “Subpart F” and “Subpart S” corporations whose investors are taxed similarly.

As Barrett told Grossman, it’s unclear how these longstanding taxes can be distinguished from the tax at issue in Moore, except for the fact that the tax before the Court is a “one shot.”

Similarly, as Justice Elena Kagan pointed out, it is “quite well-settled” that the United States may tax individual shareholders on unrealized income from a foreign corporation because these sorts of taxes prevent Americans from stashing their money in a foreign company where it cannot be taxed.

Meanwhile, Alito and Gorsuch, the only two justices who seemed to have much of an appetite for reviving Macomber, often descended into baroque historical arguments that are unlikely to persuade any of their colleagues.

Alito, for example, spent a surprising amount of time jousting with Prelogar about why lawyers in an 1895 tax case did not cite a different, 1871 tax case that Prelogar discusses in her brief. Gorsuch, similarly, claimed that the Justice Department agreed with Macomber’s definition of income in a brief it filed in 1918.

These are, to say the least, very unusual arguments. Courts do not typically interpret the Constitution based on what a lawyer said during the Woodrow Wilson administration.

That said, while there are almost certainly five votes — and possibly as many as seven votes — to uphold the 2017 tax provision at issue in Moore, many of the justices spent Prelogar’s time at the podium looking for a way to decide this case narrowly. Justice Clarence Thomas, for example, repeatedly suggested that unrealized income from corporate stock could be taxed because the corporation has realized that income even if it hasn’t distributed it to its investors. A similar tax on unrealized income from real estate, however, would not be allowed.

Similarly, Justice Brett Kavanaugh suggested that the Court could avoid entirely the question of whether Congress may tax unrealized income because income earned by a corporation should count as realized income once the corporation earns it.

Likewise, in an exchange with Alito, Prelogar told the Court that, if Congress were to enact a particularly aggressive tax, such as a tax on all unrealized investments in every American’s retirement fund, the Court might strike that tax down on the grounds that Congress has not historically claimed the power to enact such a sweeping tax.

But Alito’s fear of such a ridiculous tax appeared limited to Alito. As Kavanaugh said in response, “Members of Congress want to get reelected,” and a lawmaker’s desire to remain in the good graces of their voters should be enough to ward off absurd tax proposals.

So the Moore decision may wind up being a nothingburger that upholds the 2017 tax provision on narrow grounds without saying much at all about the constitutionality of a Warren-style wealth tax. Still, most of the justices seemed to agree with Kavanaugh that Congress, and not the Court, should typically decide who is taxed and how they are taxed.