Tax Lawyer's Blog

This is a follow up post to my recent posts Harvard Professor, Lawrence Tribe, on the Legality of Taxation of AIG Bonuses and Is Congress’ Plan to RetroactivelyTax AIG Bonuses Constitutional.

Kay Bell of Don’t Mess With Taxes wrote the following in a post titled AIG Bonus Tax Effective Sans Enactment:

Laurence H. Tribe, a professor of constitutional law at Harvard Law School, fist thought the [AIG Bonus Tax] would pass court review. But he has had a change of heart, now telling Tax Analysts he has “growing doubts about the constitutionality of H.R. 1586′s 90 percent AIG bonus clawback tax.”

According to Fox Business News, here’s what Tribe says now:

Tribe said that while the Supreme Court has been hesitant to nullify any tax bill in previous cases — ruling that Congress only needs a “minimally rational” reason for passing a tax — the punitive nature of this tax bill might move it closer to unconstitutional grounds.

This is what I said before Tribe changed his mind:

On Bills of Attainder – If Congress does, in fact, do as Tribe suggests and passes a broad law that targets a wider group of individuals than just the AIG bonus recipients (i.e. say a law that provides that bonuses paid to executives of companies within 5 years of receiving government bailout funds will be taxed at 90%), will that be sufficient to give cover to the fact that Congress’ real intent here is to squelch public outrage by scapegoating employees who contracted for these bonuses long before the bailout funds were ever authorized?

As Judge Andrew Napolitano, FOX News’s Senior Judicial Analyst, said:

This is not a tax bill, this is vengeance.

And that makes the retroactive tax law punitive and, therefore, unconstitutional.

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