Taxes - Ex Post Facto

I wrote yesterday about the House of Representatives' passage of a 90% tax to confiscate bonuses paid recently to American International Group (AIG) executives. I want to address the question of whether a retroactive tax like this is Constitutional.

Article I, Section 9 of the Constitution states, "No…ex post facto Law shall be passed." An ex post facto law is one that regulates actions that have already occurred when the law is passed. Clearly, ex post facto laws are unfair. The President might sign a law on Monday, for example, lowering the speed limit from 65 to 55 miles per hour. If so, it would be unfair to give a ticket to someone who drove 60 miles per hour on Sunday, when the speed limit was still 65. Similarly, it is unfair to pass a tax in 2009 on bonuses that AIG employees contracted for in 2008 and collected early in 2009 before the tax was enacted.

Nevertheless, over the years the Supreme Court constructed elaborate arguments why a retroactive tax does not, in fact, violate the Constitution. The unanimous decision in the 1984 case of Pension Benefit Guaranty Corporation v. R. A. Gray & Co is typical. In that decision, Brennan, J. wrote, "Provided that the retroactive application of a statute is supported by a legitimate legislative purpose furthered by rational means, judgments about the wisdom of such legislation remain within the exclusive province of the legislative and executive branches". In other words, it is up to the President and Congress whether to pass an ex post facto, as long as they do it in the course of executing the responsibilities delegated to them by the Constitution ("legitimate legislative purpose").

This argument may be refuted by a reductio ad absurdum, i.e., by showing that the logical conclusion of the argument is ridiculous. If the Government may ignore the rights of the people for a "legitimate purpose", then the people have no rights at all. Making war is a legitimate purpose that can be hampered by the scrutiny of a free press. By Brennan's argument, the government may ignore the First Amendment and muzzle reporters during wartime. Preventing crime is a legitimate purpose that can be hampered by the right of the people to keep and bear arms. By Brennan's argument, the government may ignore the Second Amendment and outlaw gun ownership. Gathering evidence for criminal prosecution is a legitimate purpose that can be hampered by the need to show probable cause before obtaining a search warrant. By Brennan's argument, the government may ignore the Fourth Amendment and conduct unwarranted searches. Come to think of it, the government may eliminate juries, lawyers, and trials all together.

Clearly the argument that the Supreme Court uses to justify retroactive taxes is one that is easily abused, putting our freedom at risk. The Logic Critic gives Mr. Justice Brennan…

2 Blades - Wrong.