Did the House pass an ex post facto law this afternoon when it imposed a 90% tax on bonuses for people employed by TARP-fed corporations? A lot of people seem to think so, but I think the matter was settled in 1994 with the United States v. Carlton case. In essence, the government had passed a tax law and then immediately realized that it created an unwanted loophole that would cost the government $7 billion in revenue. They passed a retroactive fix and the Supreme Court ruled that it was constitutional.
Held: The 1987 amendment’s retroactive application to Carlton’s
1986 transactions does not violate due process. Under the applicable standard, a tax statute’s retroactive application must be supported by a legitimate legislative purpose furthered by rational
means. See, e.g., Pension Benefit Guaranty Corp. v. R. A. Gray &
Co., 467 U.S. 717, 729-730. Here, Congress’ purpose in enacting
the 1987 amendment was neither illegitimate nor arbitrary. Section 2057 was originally intended to create an incentive for
stockholders to sell their companies to their employees, but the
absence of a decedent stock ownership requirement resulted in the
deduction’s broad availability to virtually any estate, at an estimated loss to the Government of up to $7 billion in anticipated
revenues. Thus, Congress undoubtedly intended the amendment
to correct what it reasonably viewed as a mistake in the original
provision. There is no plausible contention that it acted with an
improper motive, and its decision to prevent the unanticipated
revenue loss by denying the deduction to those who made purely
tax motivated stock transfers was not unreasonable. Moreover, the
amendment’s retroactive application is rationally related to its
legitimate purpose, since Congress acted promptly in proposing the
amendment within a few months of §2057’s original enactment and
established a modest retroactivity period that extended only slightly longer than one year.
I think that settles it. But there is still the possibility that today’s law is a Bill of Attainder. In other words, it can be argued that the law is punitive and that it is aimed at a group of persons. You can’t pass laws that punish targeted individuals without the benefit of a trial. The law might be generalized enough to survive this challenge. Alternatively, the Court might decide that taxing the crap out of people isn’t punitive.
No, forget it. the SCOTUS is not going to go along with this.
Article 1:
this is not going to pass the senate anyway.. but what happened with the House vote today is a classic example of our doofus congress getting all bent about a huge issue, AFTER the fact, AFTER the problem has been brewing for years.
CLUE to congressional dems: ever hear of being proactive? of actually telling the SEC to do their stinking job, i.e. regulate commerce?
It will be an interesting case if it comes up before the Supremes. I would bet it gets the 4 necessary votes for cert (Alito, Scalia, Roberts and Thomas at the least) and the way the current court constituted where protecting the rights of property trumps all other rights, I suspect there’s a good chance a majority could be cobbled together to overturn it. And don’t be surprised if a few “liberal” justices vote with the conservatives though they may write concurring opinions which agree with the result on different or additional grounds.
Just my 2 cents.
and the way the current court constituted where protecting the rights of property trumps all other rights,
Did you forget Kelo v. New London already?
I heard Tweety make the argument that it was a bill of attainder, and I don’t buy it. I think you can successfully argue that no individuals are being targeted – that a group is being targeted, but it is a very large group. If this only affected AIG employees it would be illegal. But it’s anyone who got taxpayer funds, and I don’t think the Supreme Court will knock this down.
I think the Senate may feel public pressure to pass it. I hope so, in any case! I think that’s why we saw so many Republicans in the house go for it.
So many Republicans went for it because being on the wrong side of a stupid, populist tsunami like this is political suicide right now.
The crowds in the Colosseum are calling for the thumbs down while Rome burns. Perhaps the stench of blood will cover the scent of smoke.
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(CNN) — Treasury Secretary Timothy Geithner told CNN Thursday his department asked Sen. Chris Dodd to include a loophole in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses.
Sen. Chris Dodd admitted to CNN he’d added the controversial provision after a Treasury official pushed for it. Earlier in the week, Dodd had said he had not played any role in the addition of the loophole.
"But I will not let myself be reduced to silence."This whole thing is going to be blamed on the Democrats.
And nobody will ask whether the Democrats had any actual power to influence policy during the time in question.
Nobody at all.
This is typical Dodd behavior. I’m glad he wasn’t our candidate!!
Legal or not these guys should not be getting bonuses. they should be getting indictments. That is what Obama should be looking at, if Geithner lets him.
i hate to say it, but Obama’s hesitation on how to respond to the depression we are entering is at all encouraging. i would have thought since he had 2 months to put together an economic team after the election they would be more coordinated in their approach, as well as more forthright and intelligent in strategies by now.
his hesitancy to provide clear and bold leadership in the economic crisis is getting scary.
So with little argument and a 300-plus majority, Congress yesterday voted to tax bonuses given by companies (read “A.I.G.”) funded under TARP at 90%, thus recovering the multi-million dollar awards to anyone in these companies earning over half a million bucks in regular income. The fact that this was targeted at TARP recipients in general was an attempt to generalize the law… and not make it, as it clearly is, a focused punishment of a particular company.
Essentially, this is what is referred to as a Writ or Bill of Attainder, and which is specifically banned in the Constitution.
A bill of Attainder is legislative act that singles out an individual or group for punishment without a trial. Article I, Section 9, paragraph 3 specifically states: “No Bill of Attainder or ex post facto Law will be passed.”
James Madison, writing in the Federalist Papers (Number 44) in 1788 stated:
The complaints of a majority of Americans against the contracts agreed to by A.I.G. (and, for that matter, Fanny and Freddie) are solid and reasonable, but taxing them in this specific manner is likely to be unconstitutional.
Congress is really trying to cover up its unfortunate involvement in letting all this happen in the first place… a triumph of hpocrisy.
There had better be another, legal solution.
Under The LobsterScope
I hope the Dems at least try to mock the Republican alternative plan which was basically to “try” to find a solution.
Incompetence was quite possibly the biggest problem with the Bush administration. I fear that the folks over at Treasury are allowing Obama’s administration to be open to charges of the same. I have no confidence in Geithner or Summers.
First, I don’t think the Senate will pass a version. I could be wrong but cooler heads sit over there.
Second, it will not stand up as it fails the equal protection clause.
Third, $165 million will by a lot of lawyers to explain that to SCOTUS
I understand why Obama wants to let the Congress do its work because legislative work is messy and unsightly and he wants to avoid getting ick on him, but it is getting close to the point where he needs to bang some heads and tell folks to move on and work on what needs to be done.
It’s much ado about $150 million or so. Compared to the real money flushed down the toilet this isn’t much.
I’d rather a bill taxing bonuses over $500k henceforth. Maybe tied to federal bailout money, maybe for all Wall Street bonuses. Maybe for all bonuses. Then the net would be big enough to pull in some real money.
But the dynamic of the news cycle continues. Something negative happens, a Democrat is blamed for it all. I still see reactionaries posting at the SF Chronicle blaming the crash on Barney Frank. I’ll be visiting my 83 year-old mother in April and I’m sure she’ll explain it all to me like a good FOX listener.
It matters not who did what. It matters who is left holding the bag according to FOX and friends. My mom was blaming Obama before he was inaugurated. It’s the nature of things.
At least it’s something to talk about that isn’t pure doom and gloom..
As far as a read it, the tax is broadly applied enough that it shouldn’t be ruled as targeting only those who inspired it.