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The Wall Street Journal recently reported that Biden's budget appears to assume that the capital gains tax increased on April 28, 2021. The article states that whether this is true depends on whether Congress agrees.

I'm somewhat confused by why this is legal (even if Congress agrees). What's the legal basis for this not being an ex post facto law?

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2 Answers 2

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The ex post facto clause in the constitution (Article 1, Section 9, Clause 3) has been interpreted by the Supreme Court to only apply to legislation that would penalize past behavior in a criminal sense. As taxes aren't a criminal punishment, their retroactive application doesn't fall under this definition. The Congressional Research Service has published an explainer entitled Retroactive Legislation: A Primer for Congress which states:

While the Ex Post Facto Clause on its face might appear to bar all retroactive legislation, courts have applied the Clause only to penal laws. In Calder v. Bull, 3 U.S. 386 (1798), Justice Samuel Chase stated that the Clause applies to any law that renders criminal an action that was legal when it was taken, aggravates the severity of a crime, increases the resulting punishment, or alters the applicable rules of evidence after the crime was committed. In Johannessen v. United States, 225 U.S. 227 (1912), the Supreme Court declared that the Ex Post Facto Clause’s “prohibition is confined to laws respecting criminal punishments, and has no relation to retrospective legislation of any other description.”

It goes on to note that retroactive tax legislation is not at all unusual:

Congress routinely passes tax laws that apply to the full calendar year in which they are enacted, and has at times passed tax laws applicable to an entire calendar year that ended before enactment. The courts have upheld those laws against due process challenges, expressing approval of statutes that establish “only a modest period of retroactivity .. confined to short and limited periods required by the practicalities of producing national legislation.” United States v. Carlton, 512 U.S. 26 (1994).

Retroactive tax laws have been struck down by the Supreme Court in the past, but only in cases where tax increases would give "civil form to that which is essentially criminal". The example the explainer gives is Burgess v. Salmon, 97 U.S. 381 (1878), in which legislation sought to increase tobacco stamp tax while also imposing criminal penalties on the sale of tobacco without the correct stamp. This was found to violate the ex post facto clause.

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A retroactive tax increase is not a punishment

An ex-post facto law is one that punishes someone for doing something the law makes illegal before the law was passed. Ex-post facto laws are unconstitutional because they infringe upon due process of law.

Taxes are not a punishment under the law; everyone has to pay them. Because everyone has to pay them, there's no due process of law to be violated.

https://www.law.cornell.edu/constitution-conan/amendment-5/retroactive-taxes

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    How is it not a punishment on those who more closely budgeted their funds such that the increase in taxes which would have changed their behavior if passed before the fact causes material losses when passed after the fact?
    – Andy
    Commented May 28, 2021 at 21:52
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    @Andy Because taxation is not punishment.
    – Logarr
    Commented May 28, 2021 at 21:56
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    @Andy It is not a punishment in the sense that a judge does not rule against you, saying something silly like "Mr. Andy is guilty of budgeting his funds wisely, and therefore has a special obligation to pay more that is not binding on the rest of society."
    – Joe
    Commented May 28, 2021 at 22:40

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