The Legislative Retroactivity Question

The US Congress has often enacted laws with retroactive effects, especially in the case of tax laws. While the US Constitution does not explicitly bar retroactive legislation, it does prohibit ex post facto laws, which are laws with retroactive effects that are punitive in nature. The Supreme Court has upheld the constitutionality of modest retroactive tax laws, deeming them customary congressional practice. However, retroactive laws that interfere with judicial rulings or violate the Due Process Clause of the Fifth Amendment may be deemed unconstitutional. The determination of whether a retroactive law is permissible depends on the specific context and purpose of the legislation.

Retroactive tax legislation and the US Constitution

It is quite common for Congress to enact tax legislation that applies retroactively. Typically, such legislation is retroactive back to the beginning of the year of enactment, but other periods are sometimes used as well. The Supreme Court has made clear that a modest retroactive application of tax laws is permissible, describing it as a "customary congressional practice" required by "the practicalities of producing national legislation".

The question often arises as to whether Congress can enact retroactive tax legislation, effectively "setting back the clock" and making a law effective as if it had been enacted at an earlier point in time. The short answer is that retroactive tax legislation is not absolutely barred by the U.S. Constitution. In fact, the Supreme Court has deemed it a "customary congressional practice". As such, there are few examples of retroactive tax legislation being struck down as unconstitutional. However, it is possible for retroactive tax legislation to violate the Constitution.

Retroactive tax legislation potentially implicates the Due Process Clause of the Fifth Amendment, which states that no person shall "be deprived of life, liberty, or property, without due process of law". This clause presents the most common potential concern for Congress because it appears that extended periods of retroactivity might be unconstitutional. The standard used to determine whether retroactive tax legislation violates substantive due process is whether the retroactive application is "supported by a legitimate legislative purpose furthered by rational means". This is known as the rational basis test, and it is a low standard of review by the courts. Once it is met, "judgments about the wisdom of such legislation remain within the exclusive province of the legislative and executive branches".

The Carlton case established a two-part test that upholds retroactive tax application if:

• The legislation is not arbitrary and has a rational legislative purpose
• The period of retroactivity is not excessive

The Court has upheld several tax laws where the period of retroactivity extended into the preceding calendar year. For example, in United States v. Carlton, the Court upheld the retroactive application of a federal estate tax provision that limited the availability of a recently added deduction for the proceeds of sales of stock to employee stock ownership plans. The Court noted that Congress acted promptly and established only a modest period of retroactivity.

Retroactive civil laws

The US Constitution does not absolutely bar Congress from enacting retroactive laws. However, certain constitutional limits apply, and courts interpreting ambiguous statutes apply a general presumption against retroactivity. The Supreme Court has deemed the enactment of retroactive tax legislation a "customary congressional practice" required by "the practicalities of producing national legislation".

Congress routinely passes retroactive civil laws, and courts have upheld them against Due Process challenges. The Fifth Amendment's Due Process Clause, which states that no person shall "be deprived of life, liberty, or property, without due process of law", is the most common constitutional concern for Congress when it comes to retroactive legislation. The standard used to determine whether retroactive legislation violates substantive due process is whether the retroactive application is "supported by a legitimate legislative purpose furthered by rational means". This is known as the rational basis test, and it is a low standard of review by the courts.

Retroactive civil legislation is also referred to as Ex Post Facto laws. These are expressly forbidden by the US Constitution with respect to federal and state laws. However, in some nations that follow the Westminster system of government, ex post facto laws may be possible due to the doctrine of parliamentary supremacy. In a nation with an entrenched bill of rights or a written constitution, ex post facto legislation may be prohibited or allowed, with provisions that may be general or specific. For example, Article 29 of the Constitution of Albania explicitly allows retroactive effect for laws that alleviate possible punishments.

In Canada, changes to civil law can be, and occasionally are, enacted ex post facto. In one example, a convicted murderer was ordered to forfeit proceeds from a book he had published under a Saskatchewan law, despite the law being passed long after his murder conviction. The courts ruled that such laws prescribe only civil penalties and are thus not subject to Charter restrictions. Similarly, in Australia, the implementation of retrospective criminal laws is expressly prohibited by the International Covenant on Civil and Political Rights, to which the country is a party.

Retroactive criminal legislation

However, there are exceptions and nuances to this prohibition. For instance, in the United States, the Ex Post Facto Clause does not apply to laws that are deemed civil rather than criminal, even if they impose penalties. Additionally, the Supreme Court has outlined a framework for evaluating ex post facto claims, considering factors such as the historical application of similar laws and the motivations of Congress in passing the retroactive legislation.

In some countries, such as those following the Westminster system of government, the doctrine of parliamentary supremacy may allow for the passage of ex post facto laws within certain legal constraints. For example, Article 29 of the Albanian Constitution explicitly permits retroactive laws that reduce potential punishments.

It is important to note that the interpretation of retroactive criminal legislation can be complex and context-specific. While retroactive laws that impose new punishments or increase the severity of existing ones are generally prohibited, laws that retroactively reduce punishments or provide other benefits to accused or convicted persons may be permissible or even desirable in certain circumstances.

Furthermore, the separation of powers between the legislative, executive, and judicial branches can influence the enactment and interpretation of retroactive laws. Courts may uphold retroactive legislation that serves a legitimate legislative purpose and is enacted through the proper legislative processes.

Ex Post Facto laws

In a legal context, ex post facto typically refers to a criminal statute that punishes actions retroactively, thereby criminalising conduct that was legal when it was originally performed. Ex post facto laws may also aggravate a crime by bringing it into a more severe category than it was in when committed, or change the punishment prescribed for a crime, such as by adding new penalties or extending sentences.

The United States Constitution is not the only legal framework to prohibit ex post facto laws. Ex post facto criminalisation is also prohibited by Article 7 of the European Convention on Human Rights, Article 15(1) of the International Covenant on Civil and Political Rights, and Article 9 of the American Convention on Human Rights. While American jurisdictions generally prohibit ex post facto laws, European countries apply the principle of lex mitior ("the milder law"). This means that if the law has changed after an offence was committed, the version of the law that is more advantageous for the accused is applied.

In Canada, ex post facto criminal laws are constitutionally prohibited by section 11(g) of the Charter of Rights and Freedoms. However, due to section 1 and section 33 of the Charter of Rights and Freedoms, these rights are not absolute and may be overridden. Changes to civil law in Canada can be, and occasionally are, enacted ex post facto.

In administrative law, federal agencies may apply their rules retroactively if Congress has authorised them to do so; otherwise, retroactive application is generally prohibited.

Retroactive laws in other countries

The concept of retroactive laws is recognised in most developed legal systems, reflected in the civil law maxim nulla poena sine lege ("no punishment without law"), a principle with roots in Roman law. While the United States Constitution forbids Congress and the states from passing any ex post facto laws, this prohibition applies only to criminal laws and does not restrict retroactive legislation in other areas. For instance, federal courts have been more receptive to the retroactive application of tax laws.

In nations with a Westminster system of government, ex post facto laws may be possible due to the doctrine of parliamentary supremacy. However, in countries with an entrenched bill of rights or a written constitution, retroactive legislation may be prohibited or allowed, with provisions that can be general or specific. For example, Article 29 of the Albanian Constitution explicitly allows retroactive effect for laws that alleviate possible punishments.

In Brazil, the Constitution prohibits ex post facto effects that impact acquired rights, accomplished juridical acts, and res judicata. Similarly, Article 103 of the German Basic Law requires that an act can only be punished if it was already punishable by law at the time it was committed. In France, the principle of non-retroactivity is enshrined in Article 8 of the Declaration of the Rights of Man and of the Citizen, giving it constitutional status.

Australia, a signatory to the International Covenant on Civil and Political Rights, adheres to the prohibition of retrospective criminal laws outlined in the Covenant. The Australian Human Rights Commission considers the Declaration an expression of fundamental values but does not create direct legal obligations.

In Canada, while there has been no attempt to enact ex post facto laws, the sex offender registry has a somewhat retroactive nature. Sex offender registration was not mandatory until 2011, but it was required for those convicted before December 15, 2004, and serving a sentence on that date.

On the international stage, the Vienna Convention on the Law of Treaties recognises that treaties may have retroactive effects if such an intention is expressed or clearly implied in the treaty's terms. Provisional entry into force of treaties is also recognised in international law, where a treaty not yet in force can be applied as if it were by the agreeing parties.

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