# Democrats Pass 90% tax on AIG bonuses **URL:** \ **Category:** Great Debates\ **Created:** [March 19, 2009, 7:06pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058 "2009-03-19T19:06:44Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 19, 2009, 7:06pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/1 "2009-03-19T19:06:44Z")
Story [here](http://www.breitbart.com/article.php?id=D971964O1&show_article=1). Can this really be constitutional? Can you write a tax law so narrowly defined that it singles out a handful of people? The article mentions ‘greenmail’ taxes, but that’s applied against a certain behavior, and applies across the economy. This seems to be much more narrowly targeted: > [@](#): > > The bill would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money. First, for the bill to stop these bonuses, which are for actions taken in 2008, it would have to be a retroactive tax. Is that fair? Is it legal? I know very little about U.S. tax law, but if I were a regional sales manager for AIG, and most of my income came from bonuses, and I planned my life around them and then because my bosses took a bailout these yahoos decided that my own money was forfeit, I’d be hopping mad. If this is constitutional, what’s to stop Congress from passing a 100% tax, say, on the incomes of people who make more than 5 million dollars per year from talk-radio advertising revenue and who also weigh more than 250 pounds? ---
**Author:** ![spazattak](https://avatars.discourse-cdn.com/v4/letter/s/8e8cbc/32.png) [@spazattak](https://boards.straightdope.com/u/spazattak)\ **Post date:** [March 19, 2009, 7:13pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/2 "2009-03-19T19:13:35Z")
> [@Sam\_Stone](#): > > Story [here](http://www.breitbart.com/article.php?id=D971964O1&show_article=1). > > Can this really be constitutional? Can you write a tax law so narrowly defined that it singles out a handful of people? The article mentions ‘greenmail’ taxes, but that’s applied against a certain behavior, and applies across the economy. This seems to be much more narrowly targeted: > > First, for the bill to stop these bonuses, which are for actions taken in 2008, it would have to be a retroactive tax. Is that fair? Is it legal? I know very little about U.S. tax law, but if I were a regional sales manager for AIG, and most of my income came from bonuses, and I planned my life around them and then because my bosses took a bailout these yahoos decided that my own money was forfeit, I’d be hopping mad. > > **If this is constitutional, what’s to stop Congress from passing a 100% tax, say, on the incomes of people who make more than 5 million dollars per year from talk-radio advertising revenue and who also weigh more than 250 pounds?** I assume the same thing as it would to stop any other bill from becoming law: A filibuster, a majority against it or a veto. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [March 19, 2009, 7:14pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/3 "2009-03-19T19:14:31Z")
> [@Sam\_Stone](#): > > Can this really be constitutional? Can you write a tax law so narrowly defined that it singles out a handful of people? Larry Tribe seems to think so: [http://business.theatlantic.com/2009/03/laurence\_tribe\_is\_taxing\_aig\_legal.php](http://business.theatlantic.com/2009/03/laurence_tribe_is_taxing_aig_legal.php). As long as it’s non-punitive and not “political retribution” the legislature can be pretty narrow in defining tax policy. I’m pretty sure that the initial top income tax bracket only applied to a handful of people. [QUOTE=Sam Stone] If this is constitutional, what’s to stop Congress from passing a 100% tax, say, on the incomes of people who make more than 5 million dollars per year from talk-radio advertising revenue and who also weigh more than 250 pounds? [/QUOTE] Well, a talk-radio tax would seem to fall afoul of the “political retribution” aspect that Tribe mentions (since your example targets only one political ideology). I don’t think we can make the same blanket political claim about all AIG bonus-getters. None of this is to say it’s a particularly good idea. In fact, I tend to think these sorts of knee-jerk populism are bad ideas. But, the mob has spoken… ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:15pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/4 "2009-03-19T19:15:07Z")
What’s unconstitutional about it? ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [March 19, 2009, 7:16pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/5 "2009-03-19T19:16:16Z")
> [@Sam\_Stone](#): > > If this is constitutional, what’s to stop Congress from passing a 100% tax, say, on the incomes of people who make more than 5 million dollars per year from talk-radio advertising revenue and who also weigh more than 250 pounds? The fact that the radio guy didn’t invite the government into his business by accepting bailout money ? ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [March 19, 2009, 7:16pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/6 "2009-03-19T19:16:56Z")
> [@Diogenes\_the\_Cynic](#): > > What’s unconstitutional about it? I’m assuming **Sam** thinks it’s either a Bill of Attainder or perhaps ex post facto, or both. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:17pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/7 "2009-03-19T19:17:29Z")
The talk radio analogy is flawed because that does not involve people who received their income from the taxpayers in the first place. The bill in question only involves companies that are paying bonuses with taxpayer money. ---
**Author:** ![Cisco](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Cisco](https://boards.straightdope.com/u/Cisco)\ **Post date:** [March 19, 2009, 7:18pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/8 "2009-03-19T19:18:23Z")
> [@Diogenes\_the\_Cynic](#): > > What’s unconstitutional about it? Isn’t this ex post facto? If so, it’s explicitly forbidden in Article I, Section 9 of the constitution. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [March 19, 2009, 7:23pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/9 "2009-03-19T19:23:10Z")
> [@Diogenes\_the\_Cynic](#): > > What’s unconstitutional about it? I posted the following in another thread (and got no answer). I know this is cross-posting but seems more relevant here. Hope it is ok to do. > [@AIG Hearing: CEO Impressive](https://boards.straightdope.com/t/aig-hearing-ceo-impressive/489921/29): > > Can Congress legally vote in the special tax to claw back these bonuses? Or rather, would such a law hold-up in court? > > Seems like a Bill of Attainder which is prohibited by the Constitution: > > Article I, Section 9, paragraph 3 says that: “No Bill of Attainder or ex post facto Law will be passed.” > > Since IANAL on looking it up I found this: > > > [@](#): > > > > Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. The two former are expressly prohibited by the declarations prefixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters. > > > > SOURCE: [The Federalist Papers No. 44](http://usgovinfo.about.com/library/fed/blfed44.htm) – James Madison > > So, while I despise the thought of these creeps getting paid substantial sums to deal with the mess they made that kind of reads to me like Congress is intent on targeting a specific group and undoing the obligation of a contract after-the-fact. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:23pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/10 "2009-03-19T19:23:31Z")
I don’t think it’s ex-post-facto because it’s a tax, not a criminal law. It’s also something that’s been done before. I say good. I’m not crying in my beer for these cocksuckers. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:25pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/11 "2009-03-19T19:25:01Z")
> [@Cisco](#): > > Isn’t this ex post facto? If so, it’s explicitly forbidden in Article I, Section 9 of the constitution. Bonuses have been taxed retroactively before. I’m no expert, though. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [March 19, 2009, 7:25pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/12 "2009-03-19T19:25:01Z")
> [@Cisco](#): > > Isn’t this ex post facto? If so, it’s explicitly forbidden in Article I, Section 9 of the constitution. From Wiki: [Quote=Wikipedia] In the 1994 opinion United States v. Carlton, the U.S. Supreme Court unanimously held that retroactive tax laws did not violate the constitutional prohibition on ex post facto legislation. [/QUOTE] [Link](http://en.wikipedia.org/wiki/Ex_post_facto#United_States). ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 19, 2009, 7:25pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/13 "2009-03-19T19:25:29Z")
_Ex post facto_ means that if you declare something illegal today, you can’t prosecute someone for doing that illegal thing _before_ it was made illegal. Not much there relevant to tax policy. ---
**Author:** ![askeptic](https://avatars.discourse-cdn.com/v4/letter/a/eb9ed0/32.png) [@askeptic](https://boards.straightdope.com/u/askeptic)\ **Post date:** [March 19, 2009, 7:26pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/14 "2009-03-19T19:26:08Z")
> [@Cisco](#): > > Isn’t this ex post facto? If so, it’s explicitly forbidden in Article I, Section 9 of the constitution. That refers to making something a crime retroactively. They are not creating a crime they are simply implementing tax policy. Personally I think it should be 110% just because they had the balls to try to rip off more taxpayer money. Maybe someday we will get the message out that there will be costs for getting caught with your snout in the public trough. I don’t give two shits about preexisting contracts. They are in bankruptcy in all but name and bankruptcy court would have laughed at requests for bonuses. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:26pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/15 "2009-03-19T19:26:52Z")
> [@Whack-a-Mole](#): > > I posted the following in another thread (and got no answer). I know this is cross-posting but seems more relevant here. Hope it is ok to do. I don’t think it’s a bill of attainder because it’s not a tax on the company, it’s an individual income tax. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 19, 2009, 7:27pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/16 "2009-03-19T19:27:31Z")
Man, whether it’s constitutional or not, it is an incredibly bad idea, even from the standpoint of the Democrats trying to achieve their own goals. If they are trying to get banks and other companies to come forward and seek government help if they are failing, this is almost guaranteed to put an end to that. And with the attacks Liddy at Treasury is taking from these clowns, is it any wonder that Geithner can’t find quality people to fill his vacancies? No wonder Congress has a 19% approval rating. These idiots aren’t fit to govern a dog show let alone a country. [Obama’s AIG Panic](http://online.wsj.com/article/SB123742023932678335.html?mod=rss_opinion_main) > [@](#): > > The AIG Beltway bonfire continued yesterday with the spectacle of Ed Liddy, AIG’s government-appointed CEO, enduring the wrath of Congress for embarrassing the Members with post-bailout bonuses. What we now have is a full-blown political panic ignited by no less than President Obama himself that is threatening to engulf his attempts to revive the financial system, and is undermining confidence in his leadership. This is no way to promote an economic recovery. > … > One consequence will be that every bank executive in America will try to repay his Troubled Asset Relief Program, or TARP, money as rapidly as possible. The political punishment for accepting public money is becoming higher than the benefits of the extra capital cushion. According to Wells Fargo Chairman Richard Kovacevich, “If we were not forced to take the TARP money, we would have been able to raise private capital.” On Tuesday, Bank of America CEO Ken Lewis joined the rush for the TARP exits, saying he hoped to pay back the $45 billion BofA has received by 2010 if not sooner. It’s hard to argue with the sentiment. > > For the larger banking system, however, this is exactly the wrong time to be shedding capital. The main point of the TARP was to backstop the financial system against systemic failure. Treasury botched the roll out and the execution, but with the economy still in recession and housing prices still falling, banking losses will surely grow. Mr. Geithner has projected the need for more than $1 trillion more in public capital, and the FDIC has asked Congress to increase its credit line to as much as $500 billion. And in the credit where credit is due dept: Charles Rangel came out against this, saying it smacks too much of political retribution. Good for him. I think we’re seeing just the start of this nonsense. Wait until the bidding scandals and corruption scandals start flying due to the hastily-written stimulus package. There are already controversies brewing - cities are trading away their stimulus for hard cash at steep discount rates - a side effect the administration never counted on. It’s going to get worse. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [March 19, 2009, 7:33pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/17 "2009-03-19T19:33:30Z")
> [@Diogenes\_the\_Cynic](#): > > I don’t think it’s a bill of attainder because it’s not a tax on the company, it’s an individual income tax. Read the bit that James Madison wrote that I quoted. Certainly seemed their intention was to cover contracts as well and this tax explicitly seeks to undo a legally formed (if shitty) contract. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:33pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/18 "2009-03-19T19:33:57Z")
> [@Diogenes\_the\_Cynic](#): > > I don’t think it’s a bill of attainder because it’s not a tax on the company, it’s an individual income tax. I meant to say it’s not a _penalty_ on the company. A tax is not a penalty. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [March 19, 2009, 7:37pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/19 "2009-03-19T19:37:25Z")
> [@Sam\_Stone](#): > > Man, whether it’s constitutional or not, it is an incredibly bad idea, even from the standpoint of the Democrats trying to achieve their own goals. If they are trying to get banks and other companies to come forward and seek government help if they are failing, this is almost guaranteed to put an end to that. > > And with the attacks Liddy at Treasury is taking from these clowns, is it any wonder that Geithner can’t find quality people to fill his vacancies? > > No wonder Congress has a 19% approval rating. These idiots aren’t fit to govern a dog show let alone a country. > > [Obama’s AIG Panic](http://online.wsj.com/article/SB123742023932678335.html?mod=rss_opinion_main) > > And in the credit where credit is due dept: Charles Rangel came out against this, saying it smacks too much of political retribution. Good for him. > > I think we’re seeing just the start of this nonsense. Wait until the bidding scandals and corruption scandals start flying due to the hastily-written stimulus package. There are already controversies brewing - cities are trading away their stimulus for hard cash at steep discount rates - a side effect the administration never counted on. It’s going to get worse. That WSJ article is laughable demagoguery. Do you really think Americans are sympathetic to these AIG scumbags. This is a GREAT political move. Fuck those assholes. It should be 100%. It’s easy for you to be flip about it, you’re not a US taxpayer. ---
**Author:** ![scabpicker](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/scabpicker/32/8268_2.png) [@scabpicker](https://boards.straightdope.com/u/scabpicker)\ **Post date:** [March 19, 2009, 7:39pm UTC](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058/20 "2009-03-19T19:39:10Z")
I agree it will put a chill on the banks having themselves saved. On the other hand, logically, you don’t want them to do it if they don’t need to, and you don’t want the persons who made the bad decisions to actually profit personally from their foolishness. It’s a bad law, but the bailout was given in good faith with the assumption that .the parties receiving the money would understand that having a job after what has happened is what they should shoot for. Getting a bonus would be out of the question. In retrospect, the bailout money should have had TONS of restrictions coming with it. It’s too late for that, so what you get is this. [Next page](https://boards.straightdope.com/t/democrats-pass-90-tax-on-aig-bonuses/490058.md?page=2)