Retroactive Estate Tax: Can It Be Made Constitutional?

Under legislation enacted in 2001, the estate tax is repealed for individuals dying during 2010. On January 1, 2011, this legislation sunsets, and the estate tax becomes fully operative once again. In the absence of new legislation, a person dying with great wealth in 2010 escapes the estate tax, whereas a person with similar wealth dying in 2009 or 2011 would be subject to the tax. It is difficult to justify that discrimination as a policy matter. New York Times columnist Paul Krugman wrote a critical blog post about the legislation shortly after its enactment, entitled ‘‘Throwing Momma From the Train.’’ In December 2009 the House passed a bill that would retain the tax during 2010, freezing in place the rates and the exemption amounts that were effective during 2009. Unfortunately, the Senate adjourned at the end of the year without taking up estate tax legislation. It is widely anticipated that the Senate will consider legislation that would extend the tax into 2010 early in the new session. The question that many are asking is whether that legislation can constitutionally be made retroactive to the beginning of the year