The Unconstitutional AIG Bonus Tax

While this is unconstitutional without a doubt, didn't Bush do something similar in 2006? I heard this on Lou Dobbs last night when they were discussing the constitutionality of what Congress did with the passing of a bill that retroactively taxed these bonuses.

So, I did a little digging.

Here's what Bush did (which stood, even though it was a retroactive tax):

The $69 billion tax cut bill that President Bush signed this week tripled tax rates for teenagers with college savings funds, despite Mr. Bush's 1999 pledge to veto any tax increase.

Under the new law, teenagers age 14 to 17 with investment income will now be taxed at the same rate as their parents, not at their own rates. Long-term capital gains and dividends that had been taxed at 5 percent will now be taxed at 15 percent. Interest that had been taxed at 10 percent will now be taxed at as much as 35 percent.

The increases, which are retroactive to the first day of the year, are expected to generate nearly $2.2 billion over 10 years, according to the Congressional Joint Committee on Taxation, which issues the official estimates.

Source

That stood and it was a retroactive tax on a certain group of people....same thing Congress did. If this stood as constitutional, why does anyone think that the bill that the House passed yesterday (if it is signed into law) won't??

After learning about this and hearing all about what the House did yesterday, there's a bad taste in my mouth due to both.

[edit on 3/20/2009 by skeptic1]

reply to post by jsobecky


Corruption Js, all the fat rats in Washington were protecting the money that they got including the so call mr. hopes and change president during campaign and even that crock Dodd got money while this deal was been reviewed that is why he slip the bonus clause.

Is nothing but showing the corruption all of them are involved in.

Dirty, dirty rats nothing more and nothing less.

reply to post by skeptic1


Occurs they have done it before, this so call unconstitutional crap is now how the fat rats that their names will be exposed by the ones holding the strings will cover their dirty butts with.

reply to post by jsobecky


Unique times require unique solutions. Gotta get those whose ineptness. greed, and corrupt shenanigans have aided our economic demise and would like to be rewarded outrageously for it.

And when did we start adhering to the constitution again? The last 8 years showed us how little the politicians actually care for its letter of the law when it suits their need to skirt it. At least this time, they're truly trying to punish the guilty.

reply to post by VenusOnTheHalfShell


They are not trying to punish the guilty.

They are trying to cover their own butts since they were the ones that passed the legislation with the bonus protection in it in the first place.

reply to post by skeptic1


Yes, you are correct. They are surely complicit and the mob is getting larger and angrier. Can't have that or they might actually discover and broil over the obfuscation of the billions paid to the foreign banks by the treasury and fed. But, at least the mob has their attention and they are backpeddling and sweating a little. It's a start toward unraveling this twisted mess; not every move is correct but is still an action toward the solution. We all need to stay vigilant and use our voice swiftly and unrelentlessly.

This is not all AIG's fault, i don't aprove of all these rediculous bonuses, but your treasury dept. and government aproved it..and they are trying to the blame on the ceo's to cover there own behinds...wonder how much kickback they were getting before it all fell through?

reply to post by oakwood54


Oh, don't let the fat rat CEOs get away that easy, see they pay campaign money during the elections right before the TARP was passed so the merry go around was in full gear to make the whores in Washington forget about controlling the bonuses.

The right before the passing of the bill the Pimps lobbyist were passing the wealth around to get that littler forgotten bonus thing in there.

If you have no learn yet how Washington works is better that you never know.

You got one million dollar? you can buy yourself a politician now a days in Washington for pennies on the dollar.

Too bad we the tax payer can not afford them so they can start working for us.

This bonus thing is a distraction. A distraction from the $1.5 trillion dollars just printed by the Federal Reserve and the TRILLIONS of dollars that went to EUROPE.

So what if these isn't unconstitutional? Republicans seem to only defend the constitution when it comes to money and the rich being taxed.

I find it funny that Obama applauded this, considering the fact that he taught Constitutional Law at the University of Chicago law school.

their bonus was to be paid on taxpayers dollars, not on company profits

i dont see the problem with posing a tax on bonuses that are not derived from company profits, but taxpayer money.

if the govt ever proposes this tax on a company that gives them from their own profits...then u have a case, but this is tax payer money being dolled out as bonuses... and the legislation clearly states that

Like it or not (and I don't like it) there were contracts in place to pay bonuses to these employees. Most rediculous bonuses in many cases. However, a contract is a contract. The gov should not be able to enact new tax law to impose a 90% tax on employee bonuses for those who made over 250K. If another company bought AIG, they would probably have to honor the contracts. The gov didn't buy AIG, and yet they are nullifying contractual bonus payouts by enacting a new tax law.

They should have thought about that prior to rushing through the bailout plans without reading them. oy!

The gov didn't have to bail out these firms. If they didn't, then these firms would have collapsed and these folks would not have received their contractual bonuses. However, the gov did bail them out, so the contracts should stay in place.

This is a very scary precedent indeed.

This is a knee-jerk reaction to a serious screw-up by the Obama administration to gain public support... yikes

If Congressional authorized AIG Bonuses are to be taxed at 90%, then Congressional pay should also be taxed at 90%. That would be the patriotic thing to do. Paying more taxes is patriotic...didn't Joe Biden say that?

Congress stabbed us in the back with these AIG bonuses....let them pay the consequences.

reply to post by RRconservative


I can not agree more with you, RR, this just pure stupidity coming from congress, this what happen when the morons in power get too detach from what goes on in the nation while letting congress been run by lobbyist.

GOOD JOB CONGRESS!

TAX IT TO MAKE IT LOOK LIKE YOU ARE DOING SOMETHING SERIOUS!

Another one of the "mess up and fix it" hero moves.

Two pages and no one's come to point out that ex post facto only applies to criminal law, not civil law? Tax laws, as you know, are indeed considered civil law ... until you don't pay your taxes, but that's another thread.

Hm.

Anyways, see Calder v. Bull, 1798, for the breakdown of ex post facto being solely applied to criminal law. It's, unfortunately, a non-factor in the bonus tax fiasco.


In addition, the Bill of Attainder aspect can be easily avoided by wording the proposed tax to include a broader group of entities. Instead of applying the tax to just a handful of AIG employees, the proposed law needs only to say that the tax applies to, say, any employee of any company that receives bailout money from the US gov't.
Conveniently, the bill says just that.


The public outrage at the AIG bonuses is indeed misplaced and should be directed at the $billions being funneled both overseas and into the corrupt pockets of Goldman Sachs, but the gov't definitely appears to have covered its butt, constitutionally speaking, with this bill.