Courts Unlikely to Strike Down AIG Tax Law, Legal Experts Say

[dkf]

By Greg Stohr

March 20 (Bloomberg) -- Courts probably will uphold Congress’s effort to tax employee bonuses at American International Group Inc. and other companies receiving federal bailout funds, several legal experts said.

The House yesterday voted 328-93 in favor of a 90 percent tax on bonuses, including the $165 million insurer AIG paid last week after receiving $173 billion in bailout funds. The Senate plans to vote next week.

The measure raises a number of legal questions, and New Hampshire Republican Senator Judd Gregg yesterday said the legislation was unconstitutional. Still, any legal challenge will meet a significant obstacle: the historic reluctance of the Supreme Court to second-guess Congress on tax issues.

“Given the state of the law, it will be unlikely that the Supreme Court will strike down this legislation,” said Edward McCaffery, a University of Southern California tax-law professor who says he questions the wisdom of the proposal.

Gregg said the legislation would violate the constitutional ban on bills of attainder, or laws that single out individuals for punishment. “It’s basically targeted on a small group of people,” he said.

The House took several steps to shield the measure from that argument, said Laurence Tribe, a constitutional law professor at Harvard Law School.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aC_hgTeumc70&refer=worldwide

[BlooInBloo]

1. Of course. DUers who said otherwise were completely making shit up.

[dkf]

2. I must have missed those threads.

[BlooInBloo]

4. Search GD for "100% bonus tax", if interested....

Here's my favorite:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=5270717

EDIT: Oooh - this one has some CHOICE stupid in it too!
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=8266751

[Fire1]

15. Damn! Crow must really be good this time of year! LOL!!

[elleng]

7. NOT making 's*--' up;

there are good arguments on all sides.

[BlooInBloo]

8. No, there aren't. Any more than there is a "controversy" about intelligent design.

[elleng]

16. You a lawyer?

.

[elleng]

20. Controversy

'The measure raises a number of legal questions, and New Hampshire Republican Senator Judd Gregg yesterday said the legislation was unconstitutional. Still, any legal challenge will meet a significant obstacle: the historic reluctance of the Supreme Court to second-guess Congress on tax issues.

“Given the state of the law, it will be unlikely that the Supreme Court will strike down this legislation,” said Edward McCaffery, a University of Southern California tax-law professor who says he questions the wisdom of the proposal.

Gregg said the legislation would violate the constitutional ban on bills of attainder, or laws that single out individuals for punishment. “It’s basically targeted on a small group of people,” he said.

The House took several steps to shield the measure from that argument, said Laurence Tribe, a constitutional law professor at Harvard Law School.

General Language

The measure doesn’t single out employees at AIG and instead uses general language affecting all companies receiving more than $5 billion in federal bailout money. Bonuses for employees at Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley would be affected.

Tribe also pointed to a provision in the measure exempting executives at companies that repay enough bailout funds to reduce the government’s investment below $5 billion.

That provision “makes it clear that the goal is not to punish corporate executives generally, but is simply to ensure the appropriate use of government funds,” Tribe said in an e- mail.

The bill-of-attainder clause is one of the Constitution’s least-invoked provisions. The Supreme Court in 1946 cited the clause in striking down a law that barred three specified federal employees from receiving their salaries. Congress had concluded that the three engaged in subversive activities.

In 1977, the Supreme Court said Congress didn’t violate the bill-of-attainder clause when it passed a law taking control of tapes recorded by former President Richard Nixon.'

http://www.bloomberg.com/apps/news?pid=20601087&sid=aC_hgTeumc70&refer=worldwide

[dkf]

22. The Nixon case kind of seems like it would apply though. I wonder why it didn't?

In 1977, the Supreme Court said Congress didn’t violate the bill-of-attainder clause when it passed a law taking control of tapes recorded by former President Richard Nixon.'

[elleng]

23. We'll have to study this!!!

5. The Act does not violate the Bill of Attainder Clause. Pp. 468-484.

(a) However expansive is the prohibition against bills of attainder, it was not intended to serve as a variant of the Equal Protection Clause, invalidating every Act by Congress or the States that burdens some persons or groups but not all other plausible individuals. While the Bill of Attainder Clause serves as an important bulwark against tyranny, it does not do so by limiting Congress to the choice of legislating for the universe, or legislating only benefits, or not legislating at all. Pp. 468-471.

(b) The Act's specificity in referring to appellant by name does not automatically offend the Bill of Attainder Clause. Since, at the time of the Act's passage, Congress was only concerned with the preservation of appellant's materials, the papers of former Presidents already being housed in libraries, appellant constituted a legitimate class of one, and this alone can justify Congress' decision to proceed with dispatch with respect to his materials while accepting the status of his predecessors' papers and ordering in the Public Documents Act the further consideration of generalized standards to govern his successors. Pp. 471-472.

(c) Congress, by lodging appellant's materials in the GSA's custody pending their screening by Government archivists and the promulgation of further regulations, did not "inflict punishment" within the historical meaning of bills of attainder. Pp. 473-475.

(d) Evaluated in terms of Congress' asserted proper purposes of the Act to preserve the availability of judicial evidence and historically relevant materials, the Act is one of nonpunitive legislative policymaking, and there is no evidence in the legislative history or in the provisions of the Act showing a congressional intent to punish appellant. Pp. 475-484.



http://www.law.cornell.edu/supct/html/historics/USSC_CR_0433_0425_ZS.html

[C......N......C]

3. So this picks on a small group of people and that makes it unfair

making it a bill of attainder, or laws that single out individuals for punishment. Well, raise taxes on everybody making over one million dollars and then it wouldn't be singling out individuals for punishment. Problem solved, God, what would we do with all that money? Hmmm. Solve our problems maybe.

[DJ13]

6. Groups are singled out for punitive taxation all the time

Ask anyone on the street you see smoking a cigarette if they feel they are singled out and suffering a punitive tax rate.

[customerserviceguy]

11. Cigarette taxes

are usually regulatory, and not specifically punitive.

Also, they're not retroactive. When the tax on a pack goes up by a buck, they don't come around and assess you for all the cigarettes you smoked last year.

[C......N......C]

14. I heard this from a doctor. The cig tax is costing a fortune.

People are living longer and using up more health care resources. They still have the same diseases, but now they live longer and require more care. Any truth to this ?

[doc03]

5. I think all this anger about the bonuses should be directed to

whoever let this slip through. I don't know I am totally confused, was it Chris Dodd, Barney Frank,
Gietner, who? I don't care D or R figure it out and get rid of them. From what I have heard Barney Frank and Chris Dodd have been two of the main culprits in this mess from the get go. I don't really give a damn about a few million, what the hell happened to the (Billions)? Don't misunderstand I blame Bush for it mainly but it does sound like Barney Frank and Chris Dodd are two of the main players in this mess.

[elleng]

9. Dodd said he took it out

at request of someone in Treasury.

[BlooInBloo]

12. Yup. Just like Greenwald said.

[doc03]

13. I don't know, he said he had nothing to do with it, then he said

he did but someone else told him to, I don't know what the truth is! Him and Barney Frank both appear to be a big part of the banking crisis from the get go. Every time I turn on the TV Barney Frank or Chris Dodd are lecturing someone else about their involvement like they he had nothing to do with it, they both are a joke.

[elleng]

18. Haven't heard any such from Frank, just Dodd.

.

[doc03]

21. I not sure what you mean? I didn't say Barney Frank

had anything to do with the bonusgate thing. But it seems Barney Frank and Chris Dodd are two of the main characters involved in this banking mess. But I see both of them lecturing everyone else on their involvement like they are completely innocent of any blame. I don't care if they are Democrats, from what I can understand in all of this mess they played a big part in this mortgage crisis themselves.

[BlooInBloo]

19. (facepalm)

[Mike 03]

10. I wish I could muster up enough energy to give a shit about this.

This is just a huge example of sleight of hand, IMO

We can just keep arguing about nothingness. They, the powers that be, love it when we argue over total horseshit.

[Fire1]

17. Yeah, like a 'paper chase' to read a freakin 'contract.' Sheez!