Why is this UnConstitutional???

[LSK]

No mention of AIG in this bill:


To impose an additional tax on bonuses received from certain TARP recipients. (Engrossed as Agreed to or Passed by House)

HR 1586 EH

111th CONGRESS

1st Session

H. R. 1586

AN ACT

To impose an additional tax on bonuses received from certain TARP recipients.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. BONUSES RECEIVED FROM CERTAIN TARP RECIPIENTS.

(a) In General- In the case of an employee or former employee of a covered TARP recipient, the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for any taxable year shall not be less than the sum of--

(1) the tax that would be determined under such chapter if the taxable income of the taxpayer for such taxable year were reduced (but not below zero) by the TARP bonus received by the taxpayer during such taxable year, plus

(2) 90 percent of the TARP bonus received by the taxpayer during such taxable year.

(b) TARP Bonus- For purposes of this section--

(1) IN GENERAL- The term `TARP bonus' means, with respect to any individual for any taxable year, the lesser of--

(A) the aggregate disqualified bonus payments received from covered TARP recipients during such taxable year, or

(B) the excess of--

(i) the adjusted gross income of the taxpayer for such taxable year, over

(ii) $250,000 ($125,000 in the case of a married individual filing a separate return).

(2) DISQUALIFIED BONUS PAYMENT-

(A) IN GENERAL- The term `disqualified bonus payment' means any retention payment, incentive payment, or other bonus which is in addition to any amount payable to such individual for service performed by such individual at a regular hourly, daily, weekly, monthly, or similar periodic rate.

(B) EXCEPTIONS- Such term shall not include commissions, welfare or fringe benefits, or expense reimbursements.

(C) WAIVER OR RETURN OF PAYMENTS- Such term shall not include any amount if the employee irrevocably waives the employee's entitlement to such payment, or the employee returns such payment to the employer, before the close of the taxable year in which such payment is due. The preceding sentence shall not apply if the employee receives any benefit from the employer in connection with the waiver or return of such payment.

(3) REIMBURSEMENT OF TAX TREATED AS TARP BONUS- Any reimbursement by a covered TARP recipient of the tax imposed under subsection (a) shall be treated as a disqualified bonus payment to the taxpayer liable for such tax.

(c) Covered TARP Recipient- For purposes of this section--

(1) IN GENERAL- The term `covered TARP recipient' means--

(A) any person who receives after December 31, 2007, capital infusions under the Emergency Economic Stabilization Act of 2008 which, in the aggregate, exceed $5,000,000,000,

(B) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation,

(C) any person who is a member of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, determined without regard to paragraphs (2) and (3) of subsection (b)) as a person described in subparagraph (A) or (B), and

(D) any partnership if more than 50 percent of the capital or profits interests of such partnership are owned directly or indirectly by one or more persons described in subparagraph (A), (B), or (C).

(2) EXCEPTION FOR TARP RECIPIENTS WHO REPAY ASSISTANCE- A person shall be treated as described in paragraph (1)(A) for any period only if--

(A) the excess of the aggregate amount of capital infusions described in paragraph (1)(A) with respect to such person over the amounts repaid by such person to the Federal Government with respect to such capital infusions, exceeds

(B) $5,000,000,000.

(d) Other Definitions- Terms used in this section which are also used in the Internal Revenue Code of 1986 shall have the same meaning when used in this section as when used in such Code.

(e) Coordination With Internal Revenue Code of 1986- Any increase in the tax imposed under chapter 1 of the Internal Revenue Code of 1986 by reason of subsection (a) shall not be treated as a tax imposed by such chapter for purposes of determining the amount of any credit under such chapter or for purposes of section 55 of such Code.

(f) Regulations- The Secretary of the Treasury, or the Secretary's delegate, shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.

(g) Effective Date- This section shall apply to disqualified bonus payments received after December 31, 2008, in taxable years ending after such date.

Passed the House of Representatives March 19, 2009.

Attest:

Clerk.

111th CONGRESS

1st Session

H. R. 1586

AN ACT

To impose an additional tax on bonuses received from certain TARP recipients.

[truedelphi]

1. If it is a change on money received for the tax year 2009, I don't think it is

If it is to force payments on the bonus money received in 2008, I think it is.

Cannot go back and retroactively penalize people.

[Tangerine LaBamba]

2. You can't make a law

that singles out a certain individual, group, entity, or organization.

Read Marbury v. Madison for the origin of this concept. Good reading, too..............

[BrklynLiberal]

3. I believe the ex post facto argument could be brought in as well.

[Eric J in MN]

6. Congress can change the 2009 tax code in 2009.

They've done it respectively during previous years.

[AZ Criminal JD]

18. Only for changes tha afect all taxpayers in a particular class

[Wildewolfe]

7. I believe that only applies to criminal penalites

not civil matters such as taxation.

[Tangerine LaBamba]

23. Read Marbury v. Madison

See if you find criminal action in that opinion ................

[Wildewolfe]

31. I just did....

.. no mention of criminality. No mention of ex post facto either.

http://en.wikipedia.org/wiki/Marbury_v_madison

[Tangerine LaBamba]

32. Right .........

But, honestly, reading the wikipedia entry is sort of like reading a comic book version of "War and Peace." Not terribly enlightening or intellectually rewarding.

[Tangerine LaBamba]

21. You don't even reach that one.....

On its face, it cannot be done. It's called a "bill of attainder," and it's one of the great early decisions from the US Supreme Court. Marbury v. Madison is one of the first cases you read in law school.

It's beautiful. Everyone should read it. It's a great history lesson, too.................

[Eric J in MN]

4. This bill doesn't single out a corporation. It applies to...

...the employees of any corporations which took at least $5 billion in bailout money.

[Tangerine LaBamba]

24. Hence, individuals.....

You might want to read my post again..........

[Fgiriun]

14. Actually

The bill creates a new tax category and doesnt single anyone out as it certainly names no one.

[Tangerine LaBamba]

25. Please

It singles out a class - the folks who got the bonuses - and, if you read up on Bills of Attainder, or even the decision that first framed it in American jurisprudence, you'll learn a lot.

[LSK]

17. Again, it refers to TARP recipients, not a specific company n/t

[Tangerine LaBamba]

27. I want to respond to this

in a meaningful manner, but it's just impossible.

I would, instead, urge you to read up on Marbury v. Madison, Bills of Attainder.

And, just for fun, you might want to read my post.

[gmudem]

33. Marbury v. Madison is a highly problematic decision

I also don't think it applies to making a law singing out a certain individual. The majority of Marshall's opinion in this case is irrelevant to the case as he is simply grinding his political axe. He also should not have been able to decide on the case because he was involved in it but he refused to recuse himself, and their would not have a been a quorum without him.

You are right on principal though, just not on the case it came from.

[Tangerine LaBamba]

34. All the Supreme Court decisions

must always be considered within the political context of their times. That's why African-Americans are no longer a fraction of Caucasians. The Supreme Court is not immune to the outside world, for which we must be thankful. Otherwise, we'd have the law as Antonin Scalia sees it, a stagnant, unchanging, unyielding instrument rendering automatic decisions, free of nuance, compassion, or relevance.

That's why Marbury v. Madison is such a brilliant teaching instrument. Everyone always has an axe to grind. Check out who Justice Thomas's wife worked for at the time Gore v. Bush was decided. That's a nice piece of trivia that contaminated our political process for eight years. Maybe more.

But, history and bias notwithstanding, Marbury v. Madison stands as the signal discussion of bill of attainder. It set the standard, and that's another part of why it's such a classic, such a brilliant opinion. Taken in its totality, it's a perfect picture of what our country was like in that time, and it does come down on the proper side. At least, I think so.

I love the law, and our history of law. I taught Constitutional Law for a while at my alma mater, and practiced for a long time. I write now, but I still love it. Can you tell?

Thanks very much for the historical insight.

[Journeyman]

5. Article I, Section 9, paragraph 3. . .

No bill of attainder or ex post facto Law shall be passed.


(Emphasis added for to clarify.)

[Eric J in MN]

9. Changing how much people will pay in taxes for 2009 isn't considered...

...ex post facto.

[Journeyman]

13. A matter for the courts to decide. . .

[AZ Criminal JD]

8. Article I, Section 9, part 3 of the Constitution

Bills of attainer are not allowed. Specific groups can't be targeted. The law may be passed to appease the mob but the courts will toss it.

[Eric J in MN]

12. Bill of attainder is about Congress not being allowed to convict...

...someone of a crime.

It's extremely unlikely that the courts will toss this tax bill.

[AZ Criminal JD]

16. No that's not true. That is the ex post facto provision.

[HiFructosePronSyrup]

10. It's not.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8274139&mesg_id=8274139

It's not ex post facto, because it's not criminal.

It's not a bill of attainder, because it's not congress leveling a punishment.

It's not specific, because it applies to everybody within a certain bracket.

It's not unusually excessive, because there's plenty of precedent for 90+% tax.

The complaints about constitutionality are from hypocritical Republicans who just figured out they're caught in the backfire blaming Obama over the bonuses.

[rock]

28. I agree

and Congress has passed retro-active laws before.

[strategery blunder]

11. "certain TARP recipients"

might be too specific.

No it doesn't name AIG outright, but it's obvious that it's only penalizing some TARP recipients but not others.

Should probably be changed to ALL TARP recipients.

[MercutioATC]

15. Maybe not unconstitutional, but definitely stupid.

A secretary who works for AIG and is married to somebody making $250k/year loses 90% of her bonus.

They had the opportunity to craft precise legislation that targets executives getting $10M bonuses, but...once again...they went about it in their usual hamhanded way.


If I did my job this sloppily, I'd be fired.

[Eric J in MN]

20. Not if she files a separate return.

Suppose the secretary at AIG has a base salary of $40,000 per year and got a bonus of $1,000.

The bill covers:

-------------------------------
(1) IN GENERAL- The term `TARP bonus' means, with respect to any individual for any taxable year, the lesser of--

(A) the aggregate disqualified bonus payments received from covered TARP recipients during such taxable year, or

(B) the excess of--

(i) the adjusted gross income of the taxpayer for such taxable year, over

(ii) $250,000 ($125,000 in the case of a married individual filing a separate return).
-------------------------------

The amount of $41,000 which exceeds $125,000 is none.

Hence, no 90% tax.

[MercutioATC]

22. So she now has to file separately because Congress can't write a decent piece of legislation?

Depending on the size of her bonus, the extra tax her spouse has to pay for filing married/separate could effectively equal a 90% (or greater) tax.

Why not just write the fucking law correctly?

[HiFructosePronSyrup]

29. Oh, what a world.

What's this country coming to when a woman has to file a seperate tax return because her failure of a husband unjustly got a $400,000 bonus at the expense of the U.S. tax payer?

It's worse than the holocaust.

[MercutioATC]

30. Ok, try it again.....I'll type s...l...o...w...l...y for you.

(in this scenario)

Woman works for AIG making $40k/year as a secretary.

Her spouse is self-employed and makes $210k/year.

The woman gets a $1000 year-end bonus.

She can either lose $900 of that bonus to this new tax or she can file separately...which means that her spouse also has to file separately...which means that his income will be taxed at a higher rate, resulting on an effective higher "tax" on her bonus anyway.



Why should we be taxing $1000 bonuses to secretaries at 90%?

[Eric J in MN]

36. I still don't feel sorry for a couple with a combined yearly income of $251,000. NT

NT

[ljm2002]

19. Doesn't seem to be illegal...

...we'll see if anyone tries to challenge it on Constitutional grounds.

Personally, although I am as mad as anyone about the bonuses and the whole way the system is rigged, I wonder if knee jerk legislation was really the way to go. True, it allows lawmakers to look as if they're doing something; but it reeks of CYA on their part.

Also, there's the old adage about creating laws based on exceptional cases, which usually gives a bad result. Something about unintended consequences. Others here have pointed out possible unintended consequences -- i.e., any time Congress is PO'd at a group, now they can feel free to just whip up a very targeted tax law? It may be legal, but does it make any sense?

On the other hand, none of my questions about it are based on (a) sympathy for the AIG bonus recipients, nor (b) worry about precedents for other bonuses and compensation. As for (a) -- for obvious reasons, these people should not be getting bonuses right now, period -- the company is in the crapper and the AIGFP division put it there, ergo, no bonuses, retention or otherwise. As for (b) -- how could anyone, anywhere, bleat about "precedents" for "contracts" and "everyone's bonuses and compensation" -- unless they have a track record of defending the unions against the nasty depredations of the corporations and bankruptcy courts in the past 30 years, where union members routinely took pay cuts, cuts to their health plans, cuts to their pension plans, and ultimately lost all of the regular pensions and health benefits when their parent companies went bankrupt. And unlike the white collar recipients of bonus money, these were plans that workers paid into all their working lives. With that as a background, it is beyond laughable for people to suddenly be wringing their hands, all concerned about the sanctity of contracts and pay agreements. Pffffft.

[Mike 03]

26. It's ex post facto and it targets a specific group.

It's like making up a tax against gays' wedding expenses because they don't approve of gay marriage.

We can get the money back by other means.

[RB TexLa]

35. How about if it said to impose an additional tax on income received from certain public education

recipients?