Tuesday, March 17, 2009

 

AIG: Public Enemy #1

“No bill of attainder or ex post facto Law shall be passed.” U.S. Constitution Art. 1, Section 9

I thought of that when I read this: Congress Looking at New Taxes on AIG Bonuses.

“Senate Democrats will seek to recoup $165 million in bonuses paid to executives of the troubled insurance giant American International Group through a narrowly focused tax…that would tax up to 98 percent of the bonus money.”

Unfortunately – but predictably - further reading informs that prominent Republicans are also supporting this idiocy.

The most notable case involving this clause goes back to Calder v. Bull, decided in 1798. That case is often cited to conclude that the Constitutional prohibition is for criminal matters, not civil. No doubt such readers rely on the following passages:

“Still, however, in the present instance, the act or resolution of the Legislature of Connecticut, cannot be regarded as an ex post facto law; for, the true construction of the prohibition extends to criminal, not to civil, cases….The policy, the reason and humanity, of the prohibition, do not, I repeat, extend to civil cases, to cases that merely affect the private property of citizens.”

But the Opinion of Justice Chase also notes the following:

“An ACT of the Legislature (for I cannot call it a law) contrary to the great first principles of the social compact, cannot be considered a rightful exercise of legislative authority. The obligation of a law in governments established on express compact, and on republican principles, must be determined by the nature of the power, on which it is founded. A few instances will suffice to explain what I mean. …a law that destroys, or impairs, the lawful private contracts of citizens…or a law that takes property from A. and gives it to B: It is against all reason and justice, for a people to entrust a Legislature with SUCH powers; and, therefore, it cannot be presumed that they have done it.”

Further, Justice Chase thought this fact worthy of note:

“In the present case, there is no fact done by Bull and wife Plaintiffs in Error, that is in any manner affected by the law or resolution of Connecticut: It does not concern, or relate to, any act done by them.”

In the instant case, the applicable parties agree these payments were made in accordance with apparently valid contractual terms. Surely, they would have done things differently had they known of these new provisions. Further, a tax of 98% could, unless carefully worded (so you understand my skepticism), effectively be a tax of more than 100% because Federal Taxes are not generally deductible at the state level but the income presumably would still be taxed at the state level. Should they not pay the tax, then additional penalties would attach….and could there be a Takings claim – appropriating the property of one for the (supposed) benefit of all.

Strangely, the one voice of some reason in this comes from Maryland’s own Steny Hoyer:

“But House Majority Leader Steny Hoyer (D-Md.) said today that there might be issues relating to the "equal protection clause" in the Constitution that forbids laws that affect certain groups differently. For now, Hoyer advocated a course of action that centered around a public pressure campaign to persuade the AIG executives to voluntarily surrender the bonuses.”

Hey, at least he remembers the purpose of the Constitution.

Comments:
Someone told me about Sen. Schumer's comments:

"They should voluntarily return them. If they don't, we plan to tax virtually all of it," New York Sen. Chuck Schumer declared on the Senate floor.

In a slightly different context, this reminds me of, "nice business you got here, shame if it burned down." It sounds like he's a running a protection racket; not like he's making laws!
 
Damn I wish I had thought of that analogy
 
The end of the rule of law. Welcome to Venezuela.

Great analogy, S Dad.
 
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