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What Would People Think?

Thursday, March 26, 2009

Why That 90% Tax on A.I.G. Bonuses May Fail Constiutional Muster

Bottom Line: It's because Senators and Representatives can't keep their big mouths shut.

My friend Ian Millhiser who (a) requires neither food nor oxygen because he eats and breathes politics, and (b) is populist enough that he's probably sympathetic to the bonus tax points out how the statements of various Congresspeople make it more likely that this tax, if passed, will be struck down as an unconstitutional Bill of Attainder.

To be clear, I think there would be a fair constitutional argument that Congress has the right to see that taxpayer money is not squandered on rewarding failure via the A.I.G. bonuses. Taxpayer money almost always has strings attached. That's why some people were so leery of the bailout in the first place. BUT you can't pass a law for the purpose of punishing somebody.

And - with famed Constitutional Law prof Laurence Tribe having the same assessment as Ian - I think it's safe to say that Congress shot itself in the foot on this one. Whether that's a good or bad thing, I leave to your pre-existing opinion.

By the way, if you haven't done so yet, you should read my brilliant national security law analysis.


  • Can't Congresscritters pass a law because of actions taken by a group of people that still isn't necessarily limited to that group of people? If the law is widely constructed enough to encompass, say, Goldman execs too, wouldn't that still pass muster?

    This isn't asset forfeiture (read: theft) like U.S. vs. Lovett. It's taxation - really high taxation, but taxation nonetheless. We have taxation aimed at specific groups of people - drinkers, smokers, etc. - all the time. Under your and Ian's standard, you could call a tax on alcohol consumption brought about by a specific drunk-driving case a "bill of attainder," even though it affects others.

    I guess I don't see how taxes aimed at a specific group of people can be "bills of attainder," especially if they could theoretically be applied to others in that same situation.

    By Blogger Jeff, at 3/26/2009 2:24 PM  

  • Of course it is unconstitutional and of course it cannot pass. If lying was a crime, than Obama with his team would be in jail already. It seem they knew well about these bonuses to be paid out months before the scandal busted out. How pathetic.


    By Anonymous toronto condos, at 3/26/2009 3:10 PM  

  • The wonder of making comments on my blog open to the public is that I can get random flame-comments from real estate dealers in Canada (if, indeed, the link takes me to the actual author of that comment).

    Jeff - you're right that such taxes are passed all the time. The issue here is that legislative history (the comments and debates that go into making a law) can sometimes make the difference about whether a particular law passes constitutional muster. Not all the time....but when it's a close case, courts look at legislative history to help figure out the purpose behind the law. And a lot of Congressfolks are making comments on the floor that say this is about "holding A.I.G. accountable." Or you got Chuck Grassley encouraging A.I.G. execs to commit suicide (not seriously, I'm sure). These people are creating a record that paints this tax as a punishment for A.I.G. execs outrageous behavior....instead of a measure to protect taxpayer dollars.

    By Blogger Ben, at 3/26/2009 5:39 PM  

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