The Rule of Law is about drawing a bright line between legal and illegal activity. It is about ensuring that citizens can be secure in their persons and possessions, safe from the ambition or corruption of government officials. It is about putting firm limits on the power of The State. “A government of laws, and not of men”
The US Constitution explicitly prohibits ex post facto laws. An ex post facto law makes something illegal that was legal at the time it occurred. It is changing the rules after the game has ended.
This is why the talk in Washington of “retroactive” tax law changes to prevent “inversions” are offensive to our legal principles.
Most retroactive tax laws to date have been refunds, and therefore popular. Who would object, even if inappropriate?
This proposed law is different.
It is easy, and tempting to dream up ways to penalize companies fleeing the country to save on taxes, but it is best to remember why those businesses are here in the first place. It is important to see what has happened in other countries when the governments tried to stop “capital flight“.
Businesses exist to make profits. No business will stay in business without profit. “Our economy” is composed of the businesses within it. If profits are confiscated, businesses will be shuttered and new businesses will not be started. If capital cannot leave the US, no rational person will bring capital into the US. Try to control capital, and say goodbye to investment.
Prohibiting ex post facto lawmaking means that the government cannot reach back in time to punish behavior that was legal at the time. It gives citizens confidence that they are safe in their “persons and posessions”. This is a core, essential part of the Rule of Law.
Talk of retroactive tax penalties is ex post facto lawmaking. It is killing the golden goose. Will we stand and applaud punishing those companies who try to protect their profits, or will we condemn these measures for what they are – self-defeating, short sighted, and corrosive of the Rule of Law.
