Chairman of the House Ways and Means Committee, Charles Rangel, has gotten behind legislation to take away 91 percent of the AIG bonus money. Previously, Charles Rangel had been against the idea.
Why not tax the AIG bonus money at 100 percent? Charles Rangel, whose Ways and Means Committee writes all tax legislation, supposes that state and local governments would take care of the rest.
The idea of taxing away the AIG bonus money is bound to be popular with a populace enraged at the idea of paying large bonuses to incompetent executives. It will certainly be popular with elected politicians, who are in full CYA mode for having actually allowed the bonuses to happen to start with.
There is, however, only one problem with imposing a special tax on the AIG bonuses. It is very likely unconstitutional.
A bill of attainder is a special piece of legislation directed against a single person or group of people, usually to make them guilty of a crime without the benefit of a trial. If Congress were to pass a special tax against the AIG executives who received bonuses, it could be argued in court that they had passed a bill of attainder. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution.
Charles Rangel and his cohorts do not seem to be allowing a simple matter of the Constitution stand in the way of their grand standing. Indeed, it likely wouldn’t even matter to them if the special tax were to be declared unconstitutional. All that would matter to Charles Rangel, et al, is that they were seen to have tried to stick to the evil capitalists who took the bailout money and, not coincidently, are not seen as the people who caused the problem to start with.
Of course it cannot be counted that the Supreme Court will actually declare such a special tax unconstitutional. In recent years, Supreme Courts have been quite creative about what the plain language of the Constitution says as opposed to the outcome they have wanted. If the special tax were to be held to be constitutional, then the precedence will have been set. No contract, no matter how legal it was when undertaken, will be safe from Congressional efforts to meddle with it after the fact. That would not only include fat cat bonuses, but union contracts and other agreements.
If that happens, then thanks to Charles Rangel and company, the United States will have passed from a nation bound by laws and contracts to one ruled by legislative whim.
Source: Rangel on bonuses: ‘Not on our watch’, Alex Isenstadt, Politico, March 18th, 2009