CNN: House OKs bill taxing bailed-out firms' bonuses. — Page 4

Your analogy does not work.

The specific behavior of those purchasing a luxury good or purchasing an item subject to an excise tax it is not the basis for the tax being imposed. Everyone is treated the same. The same is not true of these bonuses.

Under the proposed bill, the tax would only apply to those who have a household member for tax purposes that gets a bonus from a company receiving federal assistance (with a household aggregate income in excess of $250,000).

You are taxing the bonuses differently based upon the behavior of the individual members of the group. One household with identical incomes would be taxed differently based upon what company someone worked for.

That is a fundamental distinction.

Look, I am trying to explain a general concept, on how Tribe could assert that this proposed tax would be deemed unconstitutional.

If you have two identical households, with identical deductions, identical choices, identical benefits, and the only distinction is one works for a TARP receiving company and one doesn't - the argument is that it is discriminatory to tax the one at a different rate solely because he or she works at such a company. It is targeting those individuals specifically for something they have done.

If the tax is seen as punishing a select group of people it can be viewed as a bill of attainder.

Generally, a bill of attainder,a bill of attainder is a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial.

A 90% tax when others are paying less than 40 in a similar situation may be viewed as punishment by the courts, and thus a bill of attainder.

That is the argument. Whether it will prevail if there is a legal challenge to the law, I don't know.

So, all of this is theory. I am merely trying to explain the argument on why the law may not be constitutional if passed as currently drafted. I personally believe that it would not be upheld for the reasons I have set forth, but I could be wrong.



Bill of Attainder

Updated On: 3/23/09 at 11:25 PM

That is an argument as well, but it may not be a better one.

Federal Agencies can apply rules retroactively if Congress permits them. Here, the IRS would be applying a rule retroactively (though within the same tax year) at the direction of Congress.

There is more flexibility when the law is civil, rather than criminal in nature (which this one is - though punitive, it is a civil remedy). In fact, Tribe thought there would be no issue with the Ex Post Facto nature of the law specifically because it was civil/tax in nature. From his initial impressions about the proposed law:

"The Ex Post Facto Clause applies exclusively to criminal punishment and poses no difficulty here. And the fact that the measure contemplated would operate retroactively as well as prospectively doesn?t distinguish it from any number of tax and other financial measures that the Supreme Court has upheld over the claim that fundamental fairness precludes retroactively undoing contractual obligations."

We will see what happens.
Tribe's Initial Assessment.