"I believe there is a powerful argument that your proposal is simply not retroactive. Taxpayers can avoid the tax completely by repurchasing shares they sold to the United States; the excise tax would be imposed, not on prior bonuses, but on the taxpayer's affirmative post-enactment decision not to repurchase those shares at the same price that the shares were sold to the United States."

"Even if the excise tax were... viewed as having retroactive effect, the Supreme Court has generally given a high level of judicial deference to economic legislation and has repeatedly upheld retroactive taxation as constitutional, so long as the legislation is 'supported by a legitimate legislative purpose furthered by rational means...'"

[snip]

"Your legislative proposal presents a particularly strong case for constitutionality since it has only a modest look-back-period, as was the case in Darusmont, and is arguably a curative measure (with regard to the executive compensation provisions of TARP), as was the case in Carlton.

Edward D. Kleinbard

Chief of Staff

Joint Committee on Taxation