Democrat lawmakers and the Obama administration are pushing a law against corporate inversion and they want it to be effective retroactive to May 8.

The lawmakers and the administration want to limit U.S. companies from merging with other foreign companies to minimize their tax.

Corporate inversions are a strategy used by companies wherein they enter into a merger with companies overseas to reduce their tax burden. The inversions are taking a toll on the U.S. Treasury and the law was proposed to stop further drains on government taxes.

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Michael Graetz, a tax expert at Columbia Law School, said the proposed retroactive law has precedence. It can happen in instances where there is "writing on the wall" or there is obvious evidence that something is about to take place.

Graetz cited an example where in if the anti-inversion bill was passed but the lawmakers went on a recess before any action was taken, then it can be claimed that the companies should not have entered into an inversion when a law prohibiting it was already voted for.

Graetz added that the lawmakers' decision to backdate the law was a move to create uncertainty among companies the are in the middle of striking a deal.

It can cause the deals to increase in price, or it can create additional escape clauses in the deal in the event that the tax advantage is removed.

Article 3 Section 9 of the U.S. Constitution states that "No ex post facto Law shall be passed," author Alexander Hamilton said. Sanctioning a man for something that was not unlawful when the act was made is "the favorite and most formidable instruments of tyranny", Hamilton added.

TagsObama, Democrats