From the AP:
Denouncing a “squandering of the people’s money,” lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies.
Excuse me? Doesn’t the Constitution outlaw this?
Seth, the constitution hasn’t been worth the parchment it’s printed on since 2000…. I feel sorry for all of those poor fools that though the new administration would change that.
I saw some discussion of this a few days ago. From the article you linked:
“The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.”
So, they’re just taxing bonuses at any company who received a certain threshold of bailout money, not just AIG. The supreme court has previously been okay with new taxes created after the financial year in question.
A bill of attainder is a bill that declares someone guilty of a crime and punishes them, all without a trial. So a law declaring everyone who received a bonus guilty of fraud and confiscating the money? Unconstitutional. This approach? Fine.
It’s a silly legal system, but it’s the one we’ve got.
And I can’t feel too bad about the outcome. I’m not terribly sympathetic towards investment banking executives whose companies had to be massively bailed out because they ran it into the ground.
There’s a nice bit of analysis by Laurence Tribe, a law professor.
it’s not a bill of attainder; the power to tax is the power to destroy. (altho there may be some other Constitutional provision re taxes that prevents this )
It is also an ex post facto law. And an interference with contracts.
The comments from Laurence Tribe are interesting, and he is a well-known legal scholar. But I think his comments illustrate one of the big problems we have in the USA. The lawyer looks at the Constitution and says, How can I get around this? Very few people think of the Constitution as being something that contains wisdom and guidance.
There are some very good reasons that a government should not be allowed to pass a law punishing a person without due process (bill of attainder), or making an act a crime after the fact (ex post facto), or interfering with contracts between individuals.
Of course they start by aiming the law at people for whom we don’t have a lot of sympathy. When they come after you, the precedent will have already been set.
It’s legal. The government does this sort of thing all the time with income taxes. For example, in 2008, many of us received “stimulus” checks. Technically, this was a reduction of the amount the government was to collect from our paychecks the year before. This can go either way. Just as the government can refund us part of the money we owed in 2007 in 2008, they can penalize us in 2009 on our 2009 and 2008 taxes, as is the case here.
Ed’s got the basic idea right but the dates wrong. The Constitution’s been ignored for much longer than that. 90 years ago people realized that it would take a Constitutional Amendment to ban one intoxicant but just a few years later decided that one was no longer necessary to ban others.
Unrelated:
https://business.theatlantic.com/2009/03/why_we_should_track_and_measure_everything.php
You are mentioned in this article.
The Wall Street Journal agrees:
https://online.wsj.com/article/SB123776465612908965.html#mod=djemEditorialPage
And Laurence Tribe is having second thoughts:
https://theplumline.whorunsgov.com/economy/law-professor-who-advised-obama-says-house-aig-bill-may-be-unconstitutional/
I certainly defer to whatever professor Tribe has to say on the topic, but as I understand things, the Constitution merely prohibits voiding contracts. (Bills of Attainder actually deal with criminal acts – not civil/financial matters) The contract clause is closer to what’s going on here https://en.wikipedia.org/wiki/Contract_Clause. But, taxing someone on their earnings in no way interferes with the contract itself, so I would argue that what Congress did was entirely constitutional.