Thursday, March 19, 2009

Taxing those bonuses - is it a bill of attainder?

It seems that Congress is ready to do a final breast-beating and pass through a bill taxing bonuses that people working in a firm receiving TARP money.
The AIG bonuses outrage has Congress moving at warp-speed.

House Democratic leaders announced that a bill designed to tax the bonuses out of existence will come to the House floor Thursday, mere days after the news of the $165 million payout to employees of the embattled American International Group.

The legislation would levy a stiff 90 percent tax on bonuses paid by any financial firm receiving more than $5 billion in federal funds from the Troubled Asset Relief Fund.
I usually have trouble explaining to my students what a bill of attainder is when we cover the Constitution. One reason they are mystified is because it doesn't happen and that is because it is unconstitutional. They don't know the history of England in the 17th century to understand why this is something the Founders thought was so important that it is one of the few rights of the people explicitly protected in the body of the Constitution.

A bill of attainder
is an act of a legislature to declare a person or group of people guilty and assign a penalty without the benefit of a trial. This is to preserve the separation of powers and reserve trials and penalties for the judicial process, not for legislatures.

So would a bill targeting the bonuses that those working at firms receiving TARP money qualify as a bill of attainder?

David Kravitz, a laawyer writing at Blue Mass Group
says that it would probably be considered one. (link via Volokh) Jonathon Turley has qualms as does Senator Judd Gregg. Laurence Tribe thinks that the bill could be written broadly enough to pass constitutional muster. If the Court looked at the legislative history of such a bill but there is plenty of evidence that the congressmen are specifically targeting those at AIG who received bonuses. HEck, they could enter into the record Senator Grassley's crack about how these guys should have committed suicide. They might try to disguise the retributive aspects of such a bill with language targeting all people who work at firms receiving TARP funds, but it's clear whom they're aiming at - heck, they are all rushing to microphones to tell us whom they're targeting.

We might not find out if such an act would be considered a bill of attainder until the Supreme Court receives the case and delivers an opinion. But there is something troubling about the nation's supposed solons rushing to pass a bill that comes so close to being a bill of attainder.


Betsy Newmark said...

Taxing those bonuses - is it a bill of attainder?

i would say 'yes'. i suggest the remedy is for those executives to show a decent sense of shame and apologise in public before donating the bonuses to charity

(Tacitus Voltaire originally posted it, but I mistakenly deleted it. Sorry about that - Betsy)

ic said...

The bill will be written NOT to pass the Constitutional test. The aim is to placate the gullibles who voted for the politicians and are now mad at them. As soon as the furor dies down, who cares if AIG execs paid a dime more.

As a matter of fact, those who should commit suicide in this debacle are the politicians who pushed thru the exclusion and are now too chicken to own up to it, and the politicians who voted fot the bill without reading it. It's DISHONORABLE not to faithfully carried out one's duties. Alas, the samurais were honorable people, our politicians are not.

AIG execs are getting what they are entitled to in their contracts. Nothing less, nothing more. There is no shame in accepting something that you are entitled to. But shame in passing a bill to award campaign contributors with taxpayers' money, and now try to divert voters' wrath to someone else. "Mr. Obama, Mr. Dodd, Mr. Reid and minions, have you no decency?"

Bribe takers are more disgusting than bribers. Bribers need things done, bribe takers charge them tolls to let them thru. In Mao's China, this was called "going thru the back door".

Some American voters are really stupid. They don't know what and whom they voted for, they believe there is free "govt." money to claim, free "govt." health care to take care of them. They complained about the laws but seldom tied the laws to the politicians who passed them. They complained about high taxes, and blamed the IRS, the tax collector, instead of the politicians who raised the taxes.

Bachbone said...

I'd like to know how the AIG employees who collectively kicked in over $100,000 to both Dodd and Obama now feel about their "donations."

michael said...

Luckily, our president and vice president were professors of Constitutional Law.

The Vegas Art Guy said...

Well you gotta know the law before you start to mess with it I guess Michael.

Pat Patterson said...

If it isn't a bill of attainder it still raises the issue of whether Congress should even be considering a law to punish people who were acting in a legal manner and to break contracts that were satisfactory to both sides and as of yet have not been challenged as defective.

This is the kind of acts that the fearful enact to divert the attention of the mob or at least the loudest voices from themselves. More and more legislators act on what they "know" should be done rather than respecting the limits on their power as described by statute and the Constitution.

I suppose we can expect, given all the bad publicity Alex Rodriguez has had lately the the NY state legislature will pass a law demanding he return most of the money that the Yankees have paid him or that Nicole Kidman and Hugh Jackman give up most of their contracted paycheck for being the the stinker, Australia? Or an even simpler example would be to double the tax on lottery winners because we all know that they are trailer park trash and would probably waste the money anyway!

If anyone should get the blame it should be Elliot Spitzer who, when NY's AG, forced out the previous management of AIG and threatened criminal charges for those that were owed severance packages. The other executives saw this and simply pressured the new management and the state to allow these retention bonuses or they would resign en masse.