SHAKE YOUR BOOTY

Since the votes AGAINST the bill were 85 Republicans and only 6 Democrats, I don't think "bipartisan" quite means what you think it means in regular English (Oldspeak).

Change We Can Believe In

I hope that Congress extends the tax so that it effectively caps compensation of every employee/owner at any business that provides services to AIG or any other bailed out bank at $250,000. That would mean partners at Sullivan & Cromwell (who, despite my stellar credentials, sent me a rejection letter after I submitted my resume) would have a pay cap and it would teach them a valuable lesson about what is fair and right in the world. Then, they should use the proceeds of the tax to help Elie and me pay our student loans. Where is our bailout? Isn't Elie too big to fail?

3

That was Obama's slogan. He's not a member of Congress anymore.

5-

Wow. You're completely correct. The President is absolutely insulated from everything that Congress does and they are in no way in contact. The President never suggested that the AIG bonuses get the bejeezus taxed out of them.

Nice. Very smart.

Fascinating. No one seemed to have a problem with "punitive intent" aimed at the UAW when Congress demanded contract concessions from them. God, lawyers are scum.

I was calling for the Congress to pass it. Now that it has, I'm glad the House has done their job and given voice to the mob. But it's both Bill of Attainder AND Ex Post Facto. People had already earned their money after negotiating contracts for labor, performing said labor, only to have legal position changed by Congress after the fact.

Either way, proper place for decision rests with the Court, not Congress. Let Obama direct SEC and DOJ to investigate and prosecute and let the Courts sort it out.

Contracts will be found to be valid, Congressional action (if it passes the Senate) will be found unconstitutional.

JD and ex- Hill Staffer.

There's more to the Bill of Attainder than what you've put here. Nixon v. Administrator of General Services is a good case to look at. Basically, if the law is of such nature that people in a similar situation in the future will also be held to the tax, which is true in this case, it is very unlikely to be found to be a bill of attainder, since this law will tax bonuses given by bailed out companies in the future as well, it is not just AIG execs, even though that is currently the practical effect of the bill.

Sen Dodd: How can we make up for my incompetence?

Rep. Frank: Let piss on the constitution.

Sen Dodd: Excellent Idea!

*unzip*

Sen Dodd: hey are you looking and my man sausage, What the *^&% barney!

*zip*

Umm....7 i think you're missing the point. The "punitive intent" refers to TAXATION, not contractual negotiations. Furthermore....(1) obviously those concessions were never mandated by the federal government and (2) the federal government did not seize the UAW's assets ex post facto.

Go back, drink your cool aid, and put the tin-foil hat back on please.

7, a contract concession is not a tax. Only taxes are not allowed to have "punitive intent." Also, a tax cannot be on only one person, while a contract can be with one person.

HTH

Is it illegal to transport asslobsters across state lines?

I'd be surprised to see any of the bonus receivers to challenge this, though.

SEIZE THE BOOTY!

DH works at AIG, on the insurance side completely removed from the financial products morons. In 15 years there, he worked his way up to a salary just slightly over the bottom thresold for bonus taxation. He recently received a bonus in the low 5-figures which, if this goes forward, will be taxed at 90%.

He and his div did nothing to cause this. We face all the same issues as other middle-class people -- house payments, looking 2 college tuitions in the face, etc. We are not fat cats. Is this fair?

CARESS THE BOOTY!

The Management Committee likes this idea. We plan to implement a new retroactive salary and bonus clawback program for our newly laid off associates and terminated partners. We're still debating the length of the reach-back period but the consensus is trending in the direction of extending it to the hire date.

Was there "sufficient twittering" on this matter? If so, the Constitution is a moot point, at least according to Judge James Robertson of the D.C. District Court. He says the matter on Obama's citizenship was "sufficiently twittered" -- which is the new legal standard: If there's sufficient twittering, the courts will not hear your claim.

No joke, he just RULED that "twittering" and "blogging" is a sufficient replacement for judicial investigation.

Read all about it: http://www.wnd.com/index.php?fa=PAGE.view&pageId=90955

18 - "the consensus is trending in the direction of extending it to the hire date."

Well done good sir.

the framers thought that when the british parliament of the late stuart and early hanoverian eras did this crap, it was bogus -- it's why they designed a powerful and independent judiciary as a coequal branch of government. there are lots of things a legislature will do when faced with criticism from the ignorant masses, but there should be some cooler heads prevailing. sadly, the 17th amendment robbed us of a deliberative senate, and the court will definitely punt on any appeals over this tax as a political issue. welcome to populism/thunderdome. it's a scary place out there.

14, why would they not challenge this? I think that the 11 who already left would be particularly likely to bring suit. At least I hope that someone challenges it. Letting congress get away this would set a horrible precedent. Why would anyone want to work for any bailed out company or with the government on the proposes public/private assistance program if you can't trust that you contract will be honored? And even if it is honored someone in congress might go ahead and get their panties in a bunch and form a mob. I think what congress is doing is very dangerous. The best way out would to put all of this in Tiny Tim's lap and fire him. Obama can't do that because they have been dragging their feet in getting Treasury staffed so there is no one to take over. Politically the administration is in a tight spot here and letting congress do this seems to be the only way out. Its going to be up to the courts soon.

8 - You better not be a lawyer.

The ex post facto argument isn't even interesting. If it's not criminal, it's not ex post facto.

The (losing) challenges to retroactive taxation are always raised under due process. Since this legislation is actually for the current taxable year, good f'ing luck.

Bill of Attainder...I concur with Tribe. The class is not enumerated and is large and shifting.

Dear Elie,

NYT already did this article last night!

So what's to stop Bailed Out CEO and his croanies from amending their compensation agreements to take the tax into account--gross ups? Given the governments crappy job of regulating these companies they bailed out, I doubt they have adequate covenants preventing these actions.

Another place you might want to look to see a very interesting discussion of this issue is of course the TaxProfBlog. I'm surprised that ATL didn't link to it.

So what's to stop Bailed Out CEO and his croanies from amending their compensation agreements to take the tax into account--gross ups? Given the governments crappy job of regulating these companies they bailed out, I doubt they have adequate covenants preventing these actions.

This is the reason why the bogus classification of rational basis is ridiculous. AIG has been targeted as a discrete and insular minority. See Carolene Products, n. 4. Equal protection needs to mean something or we will be consumed with the flames of popular passions. See Fed Papers. If this kind of behavior by the government is allowed to continue than we are all going to be doomed at some point. Everyone is equal and should be treated equally and this needs to include the tax system and eliminating such a "progressive" system. The idea of a progressive system just means that Congress can do stuff like this and get away with it.

Was there "sufficient twittering" on this matter? If so, the Constitution is a moot point, at least according to Judge James Robertson of the D.C. District Court.

23 - It may not be criminal, but it's punitive. And Tribe is wrong 3/4ths of the time. I'm still waiting to hear Chemerinsky on the matter.

Elie, can you email Erwin and see what he has to say for the ATL-er's?

Thanks,

8 (and 150 from way back).

I have a problem with everyone going after Liddy. I mean the guy came in and took on this huge burden for $1 a year. I know that doesn't mean he can't be blamed for anything or he gets to do whatever he wants, but maybe he should get the benefit of the doubt. Under these contracts paying out the bonuses was the right move. The contracts had provisions that if the bonuses were not paid on time then everyone was entitled to 3x the bonus they would otherwise get. That is pretty scary. And considering that the Dodd amendment specifically exempted contracts made before Feb. 11th I don't see that the guy had any other options. Had he not paid them out the employees entitled to bonuses would have a really good claim for 3x as much. This is a separate issue from the "super-tax". I think that the tax has more legs than the argument that Liddy should have just not paid the bonuses in the first place.

Here's my thing: I think Tribe might be right, but not because he's legally or constitutionally correct. The courts will probably say this tax presents a close question as to whether it is a bill of attainder, but will ultimately decide it is not because it will apply to other bonuses paid by TARP-fund receiving entities.

But, if you, for a second, think this is about anything other than a fiery mob taking property from a very particular set of people, I urge you to take the blinders off. I wish more members of Congress and the President (and I'm not talking just about Obama, Bush signed into law McCain-Feingold, which he believed to be unconstitutional) would take seriously their INDEPENDENT DUTIES to examine the Constitution and determine what is right and proper under its dictates, rather than cede all their own judgment to the federal judiciary's interpretation of the Consitution, as set forth in case law.

30 - That is irrelevent for the determination of ex post facto as it exists as an American legal concept.

Here's a research project for you since law school apparently isn't enough - find the last time the courts have entertained a constitutional challenge on ex post facto grounds in a non-criminal matter.

25 - use has majority ownership. we can sue to stop that from happening. contrast this with the other contracts, which were in place before we took majority ownership.

hope this helps clear things up for you, 1L.

32 - A-FUCKING-MEN

all your bonii are belong to us!

Three generations of imbeciles at AIG is enough.

Folks, the Constitution does not apply to the Internal Revenue Code. If you don't believe me, take a look at 26 USC 107.

I thought a Bill of Attainder was what they called it when you have anal intercourse with a Cardozo chick at a moot court competition.

WOW Mystal....amazing how much work you must have put into creating this post....what, 5 minutes of "copy/paste" and creating a poll sound about right?

I think it's pathetic that you are citing the folks at DEALBREAKER (a non-law blog). But I guess we shouldn't expect much from Elie "half-ass" Mystal. I actually discovered one of Mystal's old exams....

http://www.instructables.com/files/deriv/F1H/XD0V/FQR1HDDN/F1HXD0VFQR1HDDN.MEDIUM.jpg

Not a good knee-jerk reaction, regardless of the legality. When the TARP money was passed, the fine ladies and gentlemen in Congress should have thought about actally putting some serious regulatory limits and restrictions on tax payer money going to these organizations.

If Congress didn't want to spend tax payer money on bonuses to monkeys who screwed everything up and then left (like the 11 at AIG), there should have been better legislation. And this is only one of the many problems/omissions with the TARP legislation.

Why would Congress think that forking over money to the people who largely caused this problem, with virtually no restrictions with any teeth, use better judgment with the tax payer money than with the money they lost before?

As despicable as it is to have paid those bonuses, Congress's failure to give these guys any limits is worse. If its necessary for public catharsis to get the money back, I think the better position would be for Congress/BO to say, "we're now the majority shareholder (80%) of AIG, we're breaking the contracts (for bonuses), and try to sue us if you object." Not a good situation, but better than this silly tax thing.

That really sucks, 16 - I'm sorry.

34 - There's also the "discrete and insular" minority angle that Tribe whitewashes. Either way, it's going to be a question for the Courts, not Congress. Congress may make retroactive laws (CERCLA) but they cannot make decisions that these bonuses are inappropriate compensation. many of these employees have little to no base salary...(says Steven Pearlstein on WaPo's live discussion)...it WILL end up in the Court.

And again, I for the record, oppose these "bonii" as 36 so eloquently puts the phrase...(see Bryan Garner on plurals of octopus, idiot).

This is all a complete JOKE. Had Fidel Obama and the dems allowed enough time for Congress to actually read the legislation, this could have been caught. Congress authorized these bonuses, and now they want to take them away--bunch of idiots.

Obama and the dems bullied the nation with fear tactics (amazing how they used to say Bush did the same thing) convincing people the legislation had to be passed that Friday evening, and then Fidel Obama did not even sign the thing until later the next week.

Look people, those in Congress are all the same (dems and republicans)--dirty.

You can take my boni, but you will never, never, take my 3500 sq ft and a wife.

Unless I'm mistaken, this is not an ex post facto law. Notice the effective date: "payments received after December 31, 2008," i.e. during the current fiscal year. As Commenter 8 would remember if he pulled his head out of his ass, Congress routinely passes tax legislation that impacts the ongoing fiscal year without anyone suggesting it is ex post facto. Also, small issue, it's not criminal, so this isn't even a concern.

As for the Blue Massholes, their argument is invalid because Congress did not, in fact, set the level at 100% precisely for this reason. Also b/c state taxes in Mass and other high tax states will take care of most of the rest.

to commenter 27: read the legislation. They did exactly what you said. Sec. 1(b)(3).

90% federal tax on income. + 7.375% NYS top bracket tax on income + 3.648% NYC top bracket tax on income = 101.02%

A person living in NYC would have to pay more than 100% of an earned dollar as tax. Let's repeat that: for every $1.00 you earn, you pay the governments (all of them, fed, NYS, NYC) $1.01. That is before social security, medicare, and other indirect taxes.

Restated again: A person who makes a dollar owes more than a dollar to all the governments of the United States that claim jurisdiction over her.

The audacity of hopeless stupidity.

Then again, Bam-Bam and his Congress may have pulled a slight of hand on us. Everybody is focusing on 90%, attainer, etc.

But just as important an issue is: How is bonus defined? If this tax applies only to discretionary bonuses, then the tax may not even applies to the bonuses paid! From what I can tell, those AIG "bonuses" were deferred salary. Does deferred salary count as a "bonus"? And since part of that bonus was "earned" in a previous tax year, is that part of the bonus subject to this 101% tax rate?

For those who may argue that the Bam-Bam Congress intended the tax to apply to AIG bonuses, these Congressmen are also the people who wrote the bill protecting the AIG bonuses, and then got outraged that the bonuses were paid out. It seems like Bam-Bam and his Congress doesn't know how to write a bill without being spoon-fed by a lobbyist.

90% federal tax on income. + 7.375% NYS top bracket tax on income + 3.648% NYC top bracket tax on income = 101.02%

A person living in NYC would have to pay more than 100% of an earned dollar as tax. Let's repeat that: for every $1.00 you earn, you pay the governments (all of them, fed, NYS, NYC) $1.01. That is before social security, medicare, and other indirect taxes.

Restated again: A person who makes a dollar owes more than a dollar to all the governments of the United States that claim jurisdiction over her.

The audacity of hopeless stupidity.

Then again, Bam-Bam and his Congress may have pulled a slight of hand on us. Everybody is focusing on 90%, attainer, etc.

But just as important an issue is: How is bonus defined? If this tax applies only to discretionary bonuses, then the tax may not even applies to the bonuses paid! From what I can tell, those AIG "bonuses" were deferred salary. Does deferred salary count as a "bonus"? And since part of that bonus was "earned" in a previous tax year, is that part of the bonus subject to this 101% tax rate?

For those who may argue that the Bam-Bam Congress intended the tax to apply to AIG bonuses, these Congressmen are also the people who wrote the bill protecting the AIG bonuses, and then got outraged that the bonuses were paid out. It seems like Bam-Bam and his Congress doesn't know how to write a bill without being spoon-fed by a lobbyist.

90% federal tax on income. + 7.375% NYS top bracket tax on income + 3.648% NYC top bracket tax on income = 101.02%

A person living in NYC would have to pay more than 100% of an earned dollar as tax. Let's repeat that: for every $1.00 you earn, you pay the governments (all of them, fed, NYS, NYC) $1.01. That is before social security, medicare, and other indirect taxes.

Restated again: A person who makes a dollar owes more than a dollar to all the governments of the United States that claim jurisdiction over her.

The audacity of hopeless stupidity.

Then again, Bam-Bam and his Congress may have pulled a slight of hand on us. Everybody is focusing on 90%, attainer, etc.

But just as important an issue is: How is bonus defined? If this tax applies only to discretionary bonuses, then the tax may not even applies to the bonuses paid! From what I can tell, those AIG "bonuses" were deferred salary. Does deferred salary count as a "bonus"? And since part of that bonus was "earned" in a previous tax year, is that part of the bonus subject to this 101% tax rate?

For those who may argue that the Bam-Bam Congress intended the tax to apply to AIG bonuses, these Congressmen are also the people who wrote the bill protecting the AIG bonuses, and then got outraged that the bonuses were paid out. It seems like Bam-Bam and his Congress doesn't know how to write a bill without being spoon-fed by a lobbyist.

Does anybody remember the bailout? Wasn't that Congress' chance to write the law? Isn't this just an obnoxious make-up call, reinforcing their utter incompetence?

To all the commenters who think this is an ex post facto law, read the fucking case law guys. U.S. v. Carlton, 1994, unanimous decision. It's not criminalizing, it's not a specific punishment, therefore it's not an ex post facto law. Bill of attainder is a closer call, but given that it's not specifically targeted, has future applicability and doesn't apply to a closed group, it would likely pass muster.

7- You're an idiot

45 - What about your Lexis?

Way to go corrupt, complicit Democratic-controlled Congress, urged on by clueless, teleprompter-dependent Democratic President!

Now everyone making $250K/year or more at the nation's 25 largest financial institutions (all of which were required to take at least $5 billion of TARP money by Paulson) will leave to work at non US investment banks, hedge funds etc. All the 25 U.S. institutions will collapse (as only the janitors and secretaries will be left), all the TARP money will be lost, and what's left of the US financial system will collapse.

Nice work Nancy Pelosi/Chris Dodd/Barney Frank!!

48 - You raise good points but NYS and NYC rates need to be tax effected to take into account the federal deduction (unless the AMT swallows it up which it will for some, but not the really large bonuses). Social Security is a non-factor -- these people are all capped out any way. Medicare is an additional 1.45% so the tax should be called the 91.45% federal tax.

47-49

You're an idiot.

47-49: You should really take a tax class.

Given that the President must swear an oath to "preserve, protect and defend the Constitution" (and in this case our present President was also a Constitutional Law professor), would it not be a breach of his oath to sign into law a bill that is patently unconstitutional? I'm not talking about something that is a close call, but something that all but the most rabid partisans would agree is unconstitutional? I'm curious what people think generally (not specific to the AIG bill, should the Senate also pass it).

I understand the argument that a bill that does anything other than be verbatim unconstitutional (i.e. a law ostensibly and literally permitting "cruel and unusual punishment") would be subject to interpretation by the courts and thus not be violative of the oath, but think that even if a bill did not explicitly purport to violate the Constitution it could, in substance, be so far off the mark that President--a Con Law Scholar, to boot--would realize it was violative, and to enact it would be a knowing violation of his oath.

Discuss.

Given that the President must swear an oath to "preserve, protect and defend the Constitution" (and in this case our present President was also a Constitutional Law professor), would it not be a breach of his oath to sign into law a bill that is patently unconstitutional? I'm not talking about something that is a close call, but something that all but the most rabid partisans would agree is unconstitutional? I'm curious what people think generally (not specific to the AIG bill, should the Senate also pass it).

I understand the argument that a bill that does anything other than be verbatim unconstitutional (i.e. a law ostensibly and literally permitting "cruel and unusual punishment") would be subject to interpretation by the courts and thus not be violative of the oath, but think that even if a bill did not explicitly purport to violate the Constitution it could, in substance, be so far off the mark that President--a Con Law Scholar, to boot--would realize it was violative, and to enact it would be a knowing violation of his oath.

Discuss.

59 -- sure. You're an idiot.

58: you mean like approving the use of torture and denying POWs the protections of the Geneva Convention? Discuss

Elie, I don't get where you're going with this: "(Aren't you glad law firms didn't take any government money?)"

As your website has reported ad nauseum, law firms aren't paying bonuses big enough to get caught by this bill ($100k plus). I suppose WLRK associates and 8th years at Skadden would be affected.

What about the taking of property without due process of the law?

16 - Sorry, but if your DH is making over $250,000, you are NOT middle class. You are in the top 10% of all wage earnings in America, which is assuredly NOT middle class.

I agree that it sucks that your DH's bonus gets sucked into this tax when his division had wasn't really involved in AIG's screw up or bailout. But hey, at least you got a bonus, even if you lose 90% of it. Some us didn't even get $1 bonus and don't make anything near $250,000.

63 - The IRS just processed you duely.

Don't forget the contract clause provision and even more important the taking provision. 100% tax is a taking. 90%?

59 - So what would be the remedy against the President? Probably just impeachment... and why in Congress going to impeach the President for signing a bill that Congress just passed?

65 - Is there no point where a tax becomes less of a tax and more of a taking? This is like instead of taking a slice of pizza, the whole thing gets grabbed except for a piece of crust. Certainly a 100% tax would be a taking?

Any validity to that?

-63

To all the commenters who think this is an ex post facto law, read the fucking case law guys. U.S. v. Carlton, 1994, unanimous decision. It's not criminalizing, it's not a specific punishment, therefore it's not an ex post facto law. Bill of attainder is a closer call, but given that it's not specifically targeted, has future applicability and doesn't apply to a closed group, it would likely pass muster.

A more than 100% tax is punitive...hence ex post facto. Either way, Courts not Congress is the venue.

Why is everbody so agitated over this tax? It's merely consistent with the Barack Hussein Obama philosophy of socialism. After all, isn't this another "crisis that shouldn't be wasted," a la Rahm Emmanuel? Although I'm not so sure it's really socialism; it is more like National Socialism than socialism. The Germans even have a word for it: "Enteignung." It means, "expropriation." Keep looking for the President and the Democrats to pass the bill to expropriate the gold in your teeth.

Why is everbody so agitated over this tax? It's merely consistent with the Barack Hussein Obama philosophy of socialism. After all, isn't this another "crisis that shouldn't be wasted," a la Rahm Emmanuel? Although I'm not so sure it's really socialism; it is more like National Socialism than socialism. The Germans even have a word for it: "Enteignung." It means, "expropriation." Keep looking for the President and the Democrats to pass the bill to expropriate the gold in your teeth.

64 = communist

This is embarrassing, but not because it's "punitive" or "populist". It's embarrassing because it should have been a condition on the TARP funds to begin with. W/r/t the AIG recipients, how could it be punitive to take back a gift from the government? The tax is just preventing them from getting something they would not have received but for the government bailout of their firm. (Bankrupt companies can't pay out bonuses or wages.) He who giveth can taketh away.

congress passed the bill (obama also voted for it) that gave AIG the money; so congress should be strung out. its about time there be some political bloodletting. when will people wake up ???

47-49

You are an idiot.

I genuinely hope that all of you assholes who voted for Obama and the Democrats are having the most sincere buyer's regret right now. Here is the CHANGE you wanted. All the mouthings about ex post facto and bills of attainder and imparment of contracts are so much mental masturbation. These people don't give a flyin' screw at the Moon about the Constitution. Perhaps we'll discuss it further in the concentration camps where they put all the lawyers in a year or two.

@62 - Your understanding (and Ellie's) of the tax is incorrect. It taxes any bonus received by any person whose *household income* is above $250K. It does not tax merely the bonus itself if *it* is above $250K.

Example: I work at AIG and make $50K. My spouse works at X Co. and makes $200K. I get a bonus of $10K. Congress takes 90% of that bonus and the city and state take the remaining 10%.

Yes. They. Did.

'World's Deadliest Spider' Found in Whole Foods Produce Section
http://www.foxnews.com/story/0,2933,509876,00.html

And here's the funniest quote:

"Oddly, the Brazilian spider delivers more than a painful bite that sends most victims to the hospital. Researchers have found its venom also stimulates an hours-long erection in men."

I genuinely hope that all of you assholes who voted for Obama and the Democrats are having the most sincere buyer's regret right now. Here is the CHANGE you wanted. All the mouthings about ex post facto and bills of attainder and imparment of contracts are so much mental masturbation. These people don't give a flyin' screw at the Moon about the Constitution. Perhaps we'll discuss it further in the concentration camps where they put all the lawyers in a year or two.

President Barack Obama (who voted for the AIG bailout as a Senator) responded to the planned bonus payments by saying "[I]t’s hard to understand how derivative traders at A.I.G. warranted any bonuses, much less $165 million in extra pay."

I agree with Obama here, except I would like to take it one step further. It's hard to understand how a company that so utterly failed deserves any money from the taxpayers at all"

71/72's argument structure:

[Generally despised ideology] + [person I don't like] = [argument]

Unconstitutional? Has anyone read the 16th amendment lately?

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

ALSO, the Constitution says you have to be a "NATURAL-BORN CITIZEN" but that doesn't matter either, apparently.

83, see 68... thoughts?

82 - attack the messenger
What abluot the message?
I await your dweeb answer.

83 - Oh, so I get it. Congress can make any tax it wants. Cool. This opens the doors for a tax on all handicapped non-white homosexual women. Brilliant!

@85 - 83 here - The 16th amendment seems to allow a 100% tax on: everyone, people who make a certain gross income, or people whose name starts with "K." In short, it is a blank check for the government to confiscate as much as it desires from anyone it desires.

The more interesting debate here, at least in my mind, is the one between the equal protection and the 16th amendment. The 16th amendment was ratified last in time though so would likely trump.

@87 - Yes. It is a Pandora's Box and the only way to shut it is to amend the Constitution.

I'd just like to echo 40's comments. Why was Dealbreaker (an affiliate of ATL) doing a legal analysis of this bill before ATL??

It would be nice if the readers of Dealbreaker were maybe reminded that attorneys could be helpful in analyzing a piece of legislation. Oh that's right, according to Sweet Hot Justice, we all have too much work.

44 = right on

It doesn't matter. From his appearance on Leno last night, it sounds like President Obama is leaning toward vetoing the bill even if it gets through the senate and conference.

A bill of attainder is specifically a Congressional act declaring someone a criminal. Since this confiscation is done through taxation rather than criminal punishment, it is not technically a bill of attainder.

The technical claim that the bonuses are unconstitutional, I think, has to be framed as a violation of the rights to due process and equal protection under the law.

The narrative that the lawyers opposing the tax might use is that this confiscatory act was fueled by violent populist rage, targeted at specific people, and culminated in a confiscation of property from individuals who had no representation, without any trial or finding by a jury, as a punishment.

In support of such an argument, the analogy to a bill of attainder is certainly relevant; what Congress is doing here is arguably precisely what the framers intended to prevent by banning such laws. However, the Constitutional prohibition on such acts doesn't resolve this issue because the bonus tax is technically distinguishable.

The success of such an argument also hinges on whether this tax can be distinguished from taxes that have been upheld in the past (there were constitutional challenges to the income tax).

Regardless, this whole bonus crusade is destructive and idiotic. Grandstanding politicians are pounding a simple and symbolic issue, because they aren't smart enough to address the real problem.

This is wasting the time of officials who need to be working on the plan to get toxic securities off of institutional balance sheets, and its undermining the ability of Obama and the Treasury to operate at a time when they need to be able to act decisively.

The $165 million Congress is trying to claw back is dwarfed by the amount of wealth that has been destroyed while officials were jostling to get in front of television cameras to pretend to be outraged over bonuses everybody knew about weeks ago.

And when all the rage these legislators are stoking gets innocent Americans killed, I hope they can live with that.

41-

I agree with your suggestion that the government, as the majority shareholder (of preferred stock, no less) should have had the imagination, guts, and foresight to simply say, "we won't honor the bonus contracts, unless you can point to non-U.S. taxpayer, AIG-only business income to fund the bonuses. If you don't like it, sue us. And while you're at it, let me know what your neighbor thinks of her financing your dubious financial reward."

41-

I agree with your suggestion that the government, as the majority shareholder (of preferred stock, no less) should have had the imagination, guts, and foresight to simply say, "we won't honor the bonus contracts, unless you can point to non-U.S. taxpayer, AIG-only business income to fund the bonuses. If you don't like it, sue us. And while you're at it, let me know what your neighbor thinks of her financing your dubious financial reward."

86 - You said that you think Barack Obama is a Nazi, and then did a German vocabulary exercise. You didn't even both to connect the two.

I guess if you seriously think he's a Nazi then that wouldn't be an ad hominem attack. I just think you're an idiot, although I am told that it is very comforting to view the world through a simple-minded lens of good and evil where your beliefs are always right, so maybe that explains it. Can I get you your blankey?

64 -- have you even read this blog before??? Probably a good half of the readers here make incomes that put them in the top 5% in the US. Yet the vast bulk of us think of ourselves as middle class. Telling us someone's income puts them in the top 10%, therefore they are not middle class, is a really pathetic excuse for an argument around these parts.

You seem to forget a couple of key points. First, "middle class" is not the same as "median income." If it were, it would be a useless demographic in any kind of descriptive sense. The life of someone making a median income in 2009 looks VERY different (relatively speaking) from the life of someone making a median income in the 1950s. The expanding wealth gap has led to a dwindling of the middle class. I mean, think about it -- it's a well-known and oft-repeated observation that democracy needs a healthy middle class in order to flourish. How much sense would a statement like that make if, by definition, there were ALWAYS a middle class??

Second, 250k in New York City is night and day different from 250k in rural Iowa. Cut that number in half and you're looking at something much closer to a more realistic estimate of income, in the terms of economic indicators the government and like organizations look at. And even ignoring the disproportionate tax burden, people making that kind of income are also likely to have a high level of educational debt. You have to take into account assets, income, AND liabilities in making a determination about where someone fits on the economic ladder. Come back once you've actually lived in a city for a while and then tell us what counts as "middle class."

41-

I agree with your suggestion that the government, as the majority shareholder (of preferred stock, no less) should have had the imagination, guts, and foresight to simply say, "we won't honor the bonus contracts, unless you can point to non-U.S. taxpayer, AIG-only business income to fund the bonuses. If you don't like it, sue us. And while you're at it, let me know what your neighbor thinks of her financing your dubious financial reward."

16 - how about no salary or bonus for DH because w/out TARP funds AIG would no longer exist. DH should be pleased with his threshold income and the 10% (or less) bonus he/she gets. How many lay-offs have we seen in the past six months?

I hope we can change this bonus money into tax revenue.

-BHO

22 - 14 here. Notwithstanding the legality/illegality of Congress's actions, I would just think that anyone who might challenge this would be afraid for his life, given recent mobbing and extreme public anger over these issues.

22 - 14 here. Notwithstanding the legality/illegality of Congress's actions, I would just think that anyone who might challenge this would be afraid for his life, given recent mobbing and extreme public anger over these issues.

96 - walk like a duck, quack like a duck, probably a duck. You're missing the point, (predictably) because you don't want to think about your messiah or those in your party acting like National Socialists. Obama and the Dems do act like Nazis having embraced Enteignung. Today the House passed a bill endorsing and funding his "Volunteer Corps, which remind me of the Brownshirted Sturmabteilung.
Yeah, Obama is no socialist, He is a National Socilaist! You finally get it! Feel better dweeb?
Now get beack to work before your masters catch you spending too much time on the Internet.

Leaving aside possible challenge to 1586 as Bill of Attainder, that leaves the due process question. U.S. v Carlton and U.S. v Hemme say that mere retroactive application of a tax is not enough. The standard the court talks about in Hemme cites Welch v Henry: namely that the court must "consider the nature of the tax and the circumstances in which it is laid before it can be said that its retroactive application is so harsh and oppressive as to transgress the constitutional boundaries." This tax seems rather harsh and oppressive no?

71 -

Your use of the term socialism is curious, confused, misapplied, and appears to be solely the result of your distaste for President Obama. The government is trying to take back taxpayers' money that was used to fund bonuses paid to private individuals pursuant to a private contract.

Socialism is better reflected by the current state of affairs -- the ownership and control of the means of distribution of capital (the bonuses) in the community as a whole (we, the taxpayers).

In reality, these AIG employees have extracted the gold from OUR teeth, not the other way around.

And you raise a good point, why is everyone so agitated by this tax? AIG would not have had any money to pay out the bonuses if the government didn't step in, so where's the justification for using the taxpayers' money to pay the bonuses? It's quite clear what the government's objective was/is -- prevent the disastrous economy-wide consequences of AIG's failure. The bonuses simply do not fit into that calculus.

104-

No, it's not harsh and oppressive. The bonus-receiving employees still get to keep 10% of the bonus money. If it wasn't for the government, they likely would have gotten nothing, plus lost their job.

103 - Yes reauthorizing legislation passed by that most notorious of Nazis, Richard Nixon, is DEFINITELY adheres to the tenets of National Socialism. Foster Grandparents, Senior Corps... uh oh! Watch out for the geriatric brownshirts.

Tell you what, I'll go back to work if you agree to get an education, at least enough to know what you're talking about when you comment on blogs.

Also, don't forget to stock up on ammunition in your bunker. I hear BHO is taking that away too.

88, 89: While the 16th seems to allow broad taxation powers, there are other constitutional constraints on congress that prevent them from, say, taxing all minority women's income at 100%.

As 68 mentions, the takings clause of the 5th amendment seems to create a limit. (This is probably why congress did not tax the AIG bonuses at 100%).

Also, the first amendment would seem to prevent congress from raising taxes on members of one particular religion, or from raising taxes on people who are critical of the government.

And don't forget that Yick Wo v. Hopkins case from con law class. The 14th amendment would seem to prevent congress from taxing wooden laundries if the tax resulted in blatant discriminatory results.

106 -

Wrong.

Charles Rangel (D., N.Y.), chairman of the House Ways and Means Committee, said that a 90% tax is the ideal figure to levy on institutions receiving bailout money. "We figured that the local and state governments would take care of the other 10%," he said.

Total confiscation.

Resistance. Is. Futile.

97, I think the magic underoos may have skewed your perspective. Just because people think they are middle class does not make them middle class. Judging from the comments, people around here think that 250k is a barely liveable income, definitely solidly middle class, and (going back a ways) a department-store suit is a hopeless faux-pas. Please.

Has anyone seen that comedian that does the bit about why is everyone complaining so much? life is amazing! ("you're sitting in the sky! you're flying! why are you complaining?") I feel like saying that to those people complaining about taxes on their bonuses... you have a job! you got a bonus! the government is actually paying trillions of dollars so that your company doesn't go out of business and you can keep your job! why are you whining?

A 90% tax isn't a taking. The tax on income over $200,000 was 94% from 1945 until 1964. Furthermore, in light of the historical precedent for tax rates over 90%, it seems that the 90% figure alone isn't enough to make it punitive. Obviously this is not anywhere the end of the constitutional analysis, but focusing on the 90% figure is a red herring.

111 here - correction--the tax rate was lowered to 91% after WWII, where it stayed until 1964.

109 -

I didn't realize the Federal Government now needs to worry about how the sovereign States exercise their own power of taxation.

I'll ask again, how is it harsh and oppressive if, but for the Federal government, bonuses probably never would have been paid and these jobs would probably no longer exist?

And I'll ask an even more important question, do you care that your tax money is being used to pay 7-figure bonuses to private employees pursuant to private contracts? Who's confiscating what from whom?

97 is right, $250,000 in any big city is vastly different than $250,000 in Small Town, USA. In LA a family making that (assume 2 adults, one child) can get a 2 bed condo a couple blocks from the freeway, definitely no yard, in a school district that is not so great (I know; we're living it). Making that much may make one comfortable--and should make one grateful considering the current economy--but it certainly does not make one wealthy.

All these unconstitutionality arguments are pretty weak. Not criminal = not ex post facto (not to mention the fact that tax laws almost always cover from the beginning of the taxable year). Not bill of attainder because it applies to all TARP recipients now and in the future - not just a handful of AIG jackasses). Further, which i dont think anyone else has mentioned the 16th amendment specificall gives congress the power to tax income, without any qualifications or equivications.

113 -

The federal government does not "need to worry" about those pesky states and their so called "sovereignty." The fed can tax whomever it wants, however it wants. But that is not the point.

The real issue here is that Congress targetted these people, using the tax code as a weapon to satisfy the anger of the masses. By saying what he did, Rangel made clear that this law is meant to completely strip these people of any money that they earned and were promised under contract for services provided.

I know it is very hard for some people to understand this . . . these people EARNED this money, the same way that we earn our pay, as attorneys, for representing clients who may, at the end of the day, lose in court and end up paying out judgments. All this talk of "giving back" is a complete exercise in doublespeak. It implies that they TOOK the money in the first place.

Yes, AIG may not have had the money to pay these people if the company had not been bailed out by the taxpayers. In that case, there are bankruptcy and contract laws to make people whole. But by interfering in the situation, the federal government prevented AIG from getting to that point and artificially propped up a dying beast that should have been allowed to die. AIG was contractually obligated to pay these bonuses for past services rendered - not because of some capricious whim of greed.

Bottom line - the government CAUSED this problem and now members of congress are waiving their hands and making a show of how they are fixing it in an attempt to ride on the wave of populace anger.

113 -- I agree the bailouts were a terrible idea. Why not just take the $165 million out of the next payout to AIG, as Geithner suggested? Seems like a better idea than this terribly burdensome tax, which feels a lot like a bill of attainder to me.

107 - So you DO endorse Brownshirt thuggery. What shade of brown do wnat your new Stormtrooper shirt to be? How about a nice shade of Monkeyshit brown?
Having lived in a socialist country, I forgot more about socialism than you and the rest of your snot-nosed buddies ever learned about it in college.
Go back to work you sniveling little dweeb. You are a fool.

how many people here have banged a cardozo 1L? Ass or other orifice- all the same when the lights get dim like their Biglaw prospects!

Which school has the horniest/hottest little pre-lawyers?

Please weigh in

119 is too true. Please moderate.

For all arguing for a narrow reading of "ex post facto" to include only criminal or punitive action, I would urge you to consider that the Supreme Court, even a 9-0 Supreme Court, can be wrong.

Here, the Constitution does not say "ex post facto criminal law," nor does it use the word "punishment" in connection with the ex post facto clause. It is a general restriction on Congressional action: the effective date may not be before the date of passage, and if the law is passed with an effective date before the date of passage, then it cannot be applied to conduct before the date in question. No other reading of the text is logically coherent, despite what SCOTUS says, and despite what your professors might tell you.

Congress may not adversely posses a right against the American people, regardless of judicial complicity. Obama will veto.

115 - There has been plenty of discussion re 16th amendment. See 108.

The government knew damn well what it was doing when it said that retention bonuses could not be rescinded.

Then they realized that "rule of law" is for losers.

121 - Read Calder v Bull (1798).

Bunch of moron law students in this thread.

Remember when law students learned that the power to tax is the power to destroy?

Ah, good times.

The rule of law was okay while it lasted, but it was very restrictive.

120 - ?

"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community." James Madison, Federalist Number 44, 1788.

ha - 119 here - I got ya 120 - I'll pose the query again on the "legal wedding" bs - you can be the first responder

124 - Would you cite Korematsu as good law?

The fact that a Justice of the Supreme Court made a decree does not make that decree law. The Constitution was intended to prevent legislatures from barring conduct after the fact, and there is no means test, nor was a means test contemplated in the convention.

Furthermore, your reading of Calder is erroneous; the Justices in Calder would never have contemplated their decision being used to legitimize an ex post facto confiscatory tax.

You're an ignorant follower. Please learn to think for yourself.

Come on people! We're supposed to be lawyers. Con law arguments are for people who lost all other grounds.

This is the classic definition of a poorly drafted tax statute. It shouldn't take any of us more than 20 minutes to get around it. Sure, your executives may be better off giving back the bonus this year, but next year, the company would do right by her, or at least closely approximate the right thing.

On top of it, the rationales for confiscation (for example, "these people wouldn't have jobs but for the bail out, so it is okay to take all their money") are ... silly. If AIG went bankrupt, the executives would've been paid the bonuses anyway. I believe employees get super priority over most other creditors. At this tax rate, the employees would be better off under bankruptcy.

This tax is simpy too high- just from the smell test. If your bonus was a pizza pie from Dominos, this tax would take the pie, and the soda in your fridge.

I just don't understand how anyone can support this.

And someone please explain "inflation" to 111. 200,000 in 1964 is worth 1.3 million in 2007. Taxing 1.3 million at 90% is a far different from taxing 250k at 90%. (for clarification, we're talking about the first dollar over 1.3 mil, and the first dollar over 200k... but let's keep the discussion simple.)

Do an apples to apples comparison of buying power: 200,000 in 2007 is worth 30,200 in 1964. If the 90% rate on 200,000 continued today, we'd be taxing 90% of 30,200 of buying power. Who wants to tax 91% of $30,200?

I am still in shock that some of us (esp the deal people) can't figure these things out. No wonder we're getting laid off. We have no value to anybody if we think a 91% tax on 200,000 in 1964 is about the same as a 90% on 250,000 in 2009.

129 = Massive would-be law review douche.

I hate law students.

131: I'm not just a law student; I'm a citizen of the United States. That means something very dear to me, and it has meant everything in the world to those who have fought for Liberty. You take our Republic for granted, and I think that is shameful. The prosperity we now enjoy -- even in times of recession-- is not accidental. It is the product of liberal democracy, which was violently assaulted by the House yesterday. Though you may be content to follow precedent blindly, without considering the ramifications, to the Republic and to yourself personally, I and others are not.

If your condescending cynicism makes you, as you claim, the arbiter of those fit for the legal profession, then I would rather not join that profession. I for one, hope and believe that it does not.

-129

you stalin hitler anti-tax, pro aig fascists need to ZIP IT

Tyranny

"41-

I agree with your suggestion that the government, as the majority shareholder (of preferred stock, no less) should have had the imagination, guts, and foresight to simply say, 'we won't honor the bonus contracts, unless you can point to non-U.S. taxpayer, AIG-only business income to fund the bonuses. If you don't like it, sue us. And while you're at it, let me know what your neighbor thinks of her financing your dubious financial reward.'"

The U.S. government already made the policy decision to not allow these companies to go into bankruptcy. Now that we are the major shareholder and have a vested interest in their turnaround lets impose a punitive bonus tax ensuring that the top 10% of talent these companies absolutely need to have a shot at survival jump ship.

Think before you talk, if the U.S. government was a primary shareholder in Skadden do you think it would be smart to cap partner compensation at 250k or would that simply cause all rainmakers to leave ASAP and send the firm into a death spiral? Allowing reasonable bonuses for top people is absolutely critical to keeping these firms alive and in maintaining the hope that someday we may actually see a return on our investment.

132, I hope to God you are some sort of troll. Either that or you obviously haven't taken Con Law yet (how, it's spring semester already) or you learned nothing from it other than how to be a pompous ass.

"Follow precedent blindly"...obviously you haven't read much or any on this particular subject, since it wasn't required for your outline.

You'd have to be a pretty big douche to want to tax these folks. I mean, are you trying to kill the company?

The AIG bonuses were written into law by Dodd et al., and signed into law by Obama. If the AIG bonuses are a waste of taxpayer money and we want to get the money back, why not tax the salaries of those who made the mistake in giving away the money in the first place? Let's impose a special tax on Dodd and Obama!

Vote out the Democrats- they are destroying the economy. Three years in control of Congress and still blaming Karl Rove.

Vote out the Democrats- they are destroying the economy. Three years in control of Congress and still blaming Karl Rove.

Will preventing executive bonuses at any company put more money in any of your pockets, or benefit you in any substantial way? If so, please let me know because you are the first. If not, stop wasting your life worrying about what other people are doing and take care of yourself.

Here's yet an ADDITIONAL GROUND to find the law unconstitutional:

The "equal protection intent" of the due process clause applicable to the Federal Government:

The classification is: employees of companies who were given bail out money vs. general tax payers.

The harm is: penalizing people who earned bonus's before the bailout money was given.

This doesn't pass rational basis scrutiny.

TADA!

Same goes for "State" taxes that are attempting to steal away bonus money, except that there we can look to the REAL equal protection clause.

It's clear that, at least retrospectively, this is a penalty, not a tax.

For people who have already received or accrued their bonuses, this is a taking as well as a penalty.

This is also a bill of attainer, as applied retrospectively.

The follow words could appear in the supreme court case:

"We find it unfathomable that a retrospective tax aimed at a particular group of taxpayers, due to their choice of employer, could in any manner be considered a tax rather than a penalty. Such bills of attainer clearly violate the fundamental right to property that forms the basis of the Constitution. As such, the statute at issue is unconstitutional as applied retrospectively to the petitioners. Since the issue as to whether the statute falls within the taxing power of Congress is not before us, we make no holding as to that issue."

Here's yet an ADDITIONAL GROUND to find the law unconstitutional:

The "equal protection intent" of the due process clause applicable to the Federal Government:

The classification is: employees of companies who were given bail out money vs. general tax payers.

The harm is: penalizing people who earned bonus's before the bailout money was given.

This doesn't pass rational basis scrutiny.

TADA!

Same goes for "State" taxes that are attempting to steal away bonus money, except that there we can look to the REAL equal protection clause.

It's clear that, at least retrospectively, this is a penalty, not a tax.

For people who have already received or accrued their bonuses, this is a taking as well as a penalty.

This is also a bill of attainer, as applied retrospectively.

The follow words could appear in the supreme court case:

"We find it unfathomable that a retrospective tax aimed at a particular group of taxpayers, due to their choice of employer, could in any manner be considered a tax rather than a penalty. Such bills of attainer clearly violate the fundamental right to property that forms the basis of the Constitution. As such, the statute at issue is unconstitutional as applied retrospectively to the petitioners. Since the issue as to whether the statute falls within the taxing power of Congress is not before us, we make no holding as to that issue."