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.