- 56 -
formulation, however, does not differ from the
prohibition against arbitrary and irrational
legislation that applies generally to enactments in the
sphere of economic policy. The due process standard to
be applied to tax statutes with retroactive effect,
therefore, is the same as that generally applicable to
retroactive economic legislation: * * * that burden is
met simply by showing that the retroactive application
of the legislation is itself justified by a rational
legislative purpose. [Id. at 30-31; internal
quotations and citations omitted.]
The Supreme Court further noted:
“Taxation is neither a penalty imposed on the taxpayer
nor a liability which he assumes by contract. It is
but a way of apportioning the cost of government among
those who in some measure are privileged to enjoy its
benefits and must bear its burdens. Since no citizen
enjoys immunity from that burden, its retroactive
imposition does not necessarily infringe due process *
* * ” [Id. at 33 (quoting Welch v. Henry, 305 U.S.
134, 146-147 (1938)).]
In general, the raising of Government revenue is considered
a sufficient and legitimate legislative purpose for supporting a
“modest” period of retroactivity. Id. at 32-33; id. at 37
(O’Connor, J., concurring in judgment); NationsBank v. United
States, 269 F.3d 1332, 1337-1338 (Fed. Cir. 2002); Quarty v.
United States, 170 F.3d 961, 967 (9th Cir. 1999); Furlong v.
Commissioner, 36 F.3d 25, 27-28 (7th Cir. 1994), affg. T.C. Memo.
1993-191. The principal exception to this reasoning discernible
from caselaw arises in scenarios involving imposition of a
“wholly new tax”. See United States v. Carlton, supra at 34;
Quarty v. United States, supra at 966-967; Furlong v.
Commissioner, supra at 27; Wiggins v. Commissioner, 904 F.2d 311,
314 (5th Cir. 1990), affg. 92 T.C. 869 (1989).
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