The AIG Bonus Tax is a Bill of Attainder

Does the House of Representatives ever bother to read the Constitution?

Article 1, Section 9, Clause 3...

No Bill of Attainder or ex post facto Law shall be passed.

And how do the federal courts interpret this clause?

U.S. v. Lovett...

Legislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a trial, are 'bills of attainder' prohibited under this clause.

And in Cummings v. Missouri...

A bill of attainder, is a legislative act which inflicts punishment without judicial trial and includes any legislative act which takes away the life, liberty or property of a particular named or easily ascertainable person or group of persons because the legislature thinks them guilty of conduct which deserves punishment.

The stupid AIG bonus tax will probably never make it out of the Senate, but if it ever saw the light of day, the federal courts would nullify it in a New York minute.

Tags: Bill of Attainder (all tags)

Comments

40 Comments

Re: The AIG Bonus Tax is a Bill of Attainder

Really, do you have to turn your comment on another blog into a diary?

...

A Bill of Attainder  (0.00 / 0)
IMHO the tax on AIG bonuses has the status of a bill of attainder, meaning legislative punishment without trial, and confiscation of property is one of the classic instances of "attainder."

This stupid thing probably won't make it through the Senate anyway, but it's a very bad precedent, and the federal courts will nullify it in a New York minute, if it ever sees the light of day.
by: Jacob Freeze @ Mon Mar 23, 2009 at 10:25

...

Anyway, the bill would apply to any bailout recipients who receive more than $5 billion and there are income thresholds as well, as I understand it.  Therefore, the class of people to which it would apply is not defined with the specificity required to be unconstitutional, in my opinion, and many people smarter than me also agree:

http://www.latimes.com/news/nationworld/ nation/la-na-aig-legal20-2009mar20,0,468 056.story

http://blogs.wsj.com/law/2009/03/18/woul d-an-aig-bonus-tax-pass-constitutional-m uster-a-tribe-calls-yes/

This bill of attainder nonsense is basically a rightwing argument raised in an attempt to block the legislation.

by rfahey22 2009-03-23 11:56AM | 0 recs
Thanks for your thoughtful comment.

Thanks for your intelligent comment on my diary, however much you may disagree with my thesis.

You may have noticed that nobody replied to by original comment, which you linked. I wanted to see a little real debate on this question, so I turned it into a diary.

Even in the links you posted, opinion is not unanimous; for example, in your link to the LA Times...

"Courts sometimes look to the motivation of the legislature, and this looks like an intention to punish," said Steve Johnson, a former IRS lawyer who teaches tax law at the University of Nevada, Las Vegas. "It could also be viewed as government confiscation."

For me, the most salient feature of the AIG bonus tax is its clear intention to target "individuals" and "easily ascertainable members of a group."

No reasonable person will deny that the House was aiming at AIG personnel, in response to public outrage, and in my opinion, clear intention removes the ambiguity that makes bills of attainder much harder to identify, in other instances.

by Milo Millipede 2009-03-23 12:09PM | 0 recs
I also attached your links...

I also attached your links to the LA Times and Journal in a comment on this diary on another couple of sites where it's posted.

by Milo Millipede 2009-03-23 12:15PM | 0 recs
And...

It's also worth noticing that most of the arguments against classifying the bonus tax as a bill of attainder merely allege the rarity of laws overturned as bills of attainder, rather than arguing that the bill doesn't fit the language of Cummings v. Missouri.

by Milo Millipede 2009-03-23 12:29PM | 0 recs
Prof Lawrence Tribe of Harvard Law School

has explained how the tax on these bonuses is constitutional in a number of articles.

Google his name.

BTW, I have heard people say again and again that its an outrageous double standard that pension and union contracts are being invalidated left and right and nobody does anything.

BTW, if the US spends too much on this bailout we could end up in default and then with IMF austerity measures which would mean the end of Social Security and Medicare.

by architek 2009-03-23 05:21PM | 0 recs
Not exactly.

I took your helpful suggestion, and googled "Lawrence Tribe AIG."

The first result says...

I just got off the phone with Harvard professor Laurence Tribe, who advised Obama during the campaign, and he says he's leaning towards seeing the new House bill to tax back all the AIG bonuses as unconstitutional.

by Milo Millipede 2009-03-23 06:39PM | 0 recs
yes, Archy got all wiggly

As did others, and they channelled Larry and immediately declared themselves consititutional law jockeys...

But, the article they were referring to spoke about Congress IN GENERAL doing this...

Now that he has seen THE ACTUAL BILL, I suspect he is starting to see this is going to have some problems in the courts...

by WashStateBlue 2009-03-23 07:54PM | 0 recs
Re: Thanks for your thoughtful comment.

But it is a forward-looking proposal in addition to a backward-looking one.  Yes, certain employees at AIG presumably would be taxed (some may not be, depending on the income threshold), but there is an unidentifiable class of additional people to whom this may apply, nevermind whether or not this is indeed a punishment for purposes of this analysis.  I mean, first we're talking about a subset of AIG bonus recipients (those who make more than $250k or whatever), then there may be other companies whose employees are affected, then there may be future companies/employees.  Congress was certainly influenced to act by AIG, but it's not a closed group of people that Congress seeks to regulate.  

In Lovett, certain people were identified by name in the legislation itself and essentially banned from working for the federal government.  In Cummings, people were banned from holding public office or from working in certain professions if they did not subscribe to an oath that they had never supported the Confederacy.  Those situations are not remotely similar to a case in which a private employee may be taxed a certain rate on income above $250k (or whatever the threshold is).  Their livelihoods are not being destroyed and they received the money funding their bonuses directly from the federal government in the first place.  

Moreover, I would point out that many taxes are targeted at certain groups within society - taxes that vary based upon home ownership, family size, marital status, etc.  Simply because there is a small group of companies receiving bailout funds does not mean that laws regulating those companies or their employees raise bill of attainder issues.

by rfahey22 2009-03-23 03:02PM | 0 recs
Forward and backward

Very few laws are overturned as bills of attainder because legislatures are full of lawyers who actually read the Constitution, once upon a time, and don't stand in front of cameras proclaiming their intention to seize property from "easily ascertainable members of a group."

The fact that the bill also looks forward can't conceal its fundamentally backward intention,  and that's what Clause 3 is all about... punishing "crimes" that weren't crimes when committed, and seizing property that was lawfully acquired at the time of its acquisition.

As you say, "many taxes are targeted at certain groups within society," and all criminal law only targets a certain class of persons...the criminal class! But this is just word-play, and when the legislature has blatantly intended a tax as confiscation of particular property, belonging to particular, "easily ascertainable," individuals, it's a bill of attainder, or there's no such thing, and Article 1, Section 9, Clause 3 of the Constitution is void.

No federal court will uphold the obvious abrogation of a clause in the Constitution, without much more extraordinary cover than some bonuses for bankers.

by Milo Millipede 2009-03-23 04:50PM | 0 recs
Re: Forward and backward

I appreciate your belief, but I think it is at odds with the Constitution as it has been interpreted.  Retroactive taxation has been approved of by the Supreme Court.  The cases dealing with bills of attainder have dealt with legislation regulating closed groups of people (either individuals specified by name or groups where membership was no longer open).  The issue is not a slam-dunk for the government, but I think that the government would clearly have the upper hand.  The broad language you cited is nice and all, but that dicta isn't binding.  

by rfahey22 2009-03-23 05:30PM | 0 recs
Lawrence Tribe

Since a commenter just above you in this thread claimed Lawrence Tribe was maintaining the Constitutionality of the AIG bonus tax, I googled  him and AIG, and this first result was...


I just got off the phone with Harvard professor Laurence Tribe, who advised Obama during the campaign, and he says he's leaning towards seeing the new House bill to tax back all the AIG bonuses as unconstitutional.

Tribe says the problem with the bill is that the Constitution forbids Congress from enacting a "bill of attainder," which would essentially "legislate punishment of an identifiable class," as he put it. Tribe noted that the Supreme Court had used that clause to slap down other laws.

Tribe says the main problem is that it's hard to make the case that the law isn't "punitive."

"Its punitive intent is increasingly transparent," Tribe says. "when you have Chuck Grassley calling on [executives] to commit suicide, and people responding to pitch fork sentiment, it's hard to argue that this isn't an attempt to punish an identifiable set of individuals who are the subject of understandable outrage."

The whole point of opposing bills of attainder, Tribe says, is to prevent what some have called "trial by legislature." Tribe concludes:

"That's the primary vulnerability."

But Tribe can be wrong, and so can I, a fortiori.

Anyway, thanks for your intelligent discussion of this issue. I posted this diary on five sites, an unusually large number for me, in the hope of generating some thoughtful debate, and you were the best debater on any of them.

My bet is that this thing never makes it out of the Senate, without fundamental changes, but if it does, I'll return to MyDD and eat (virtual) crow.

by Milo Millipede 2009-03-23 06:47PM | 0 recs
Re: Thanks for your thoughtful comment.

The House bill doesn't apply to AIG specifically. It applies to any bank future or past, receiving $5 billion or more in bailout funds. This includes Bank of America, Goldman Sachs, Citigroup, AIG.

If WD Bank recieves $5 billion in funds the law would apply as well. If Milo Millipede bank takes bailout money the same applies.

by world dictator 2009-03-23 09:20PM | 0 recs
But if applies to BANKS

then therefore it could be argued that this is specifically to punish employees of banks. That may make it a bill of attainder. Does it apply to all corporations receiving government money?

by DTOzone 2009-03-23 10:36PM | 0 recs
Re: But if applies to BANKS

The legal definition of punishment mentioned in a bill of attainder refers to criminal punishment not punishment in the sense that "life isn't fair". The ban on bills of attainder was intended to secure the separation of powers ensuring that the legislative branch could never pass legislation punishing someone of a crime without trial.

U.S. v. Brown

"The Bill of Attainder Clause was intended not as a narrow, technical (and therefore soon to be outmoded) prohibition, but rather as an implementation of the separation of powers, a general safeguard against legislative exercise of the judicial function or more simply - trial by legislature."  

In the case of AIG's bonuses, a bill of attainder does not apply. No one's accusing AIG's executives of committing any crime. The government is merely taxing something that is undesirable in order to prevent it much like an excise tax. This is no different than an excise tax on tobacco that "targets" tobacco farmers or a cigarette tax that "targets" smokers.

That being said, no one's forcing AIG or any of the other banks to accept federal bailout money, and the regulation that comes with it. They can give out bonuses all day long if they simply return/repay the federal funding. But when you accept funds from the federal government there are strings attached. I hope I won't have to defend that to you as well. (And FYI before you complain about "bank's didn't know about these strings, the court has consistently ruled in favor of government's right to retroactively tax)

by world dictator 2009-03-24 04:01AM | 0 recs
Re: But if applies to BANKS

Btw, as an aside.

I should point out that this argument relies on the assumption that tax = punishment. The more we use this argument the more we reinforce a major conservative rhetorical frame.

by world dictator 2009-03-24 04:04AM | 0 recs
Re: The AIG Bonus Tax is a Bill of Attainder

Oh brother, I think hell just froze over because I am going to sort of agree with Jacob here. I think this bill skirts close enough to the definition of a Bill Attainder to be problematic. While Tribe, who I highly repspect states:

I do think Congress (and the Executive Branch) could avoid serious Bill of Attainder problems by passing a sufficiently broad law ... rather than targeting a closed class of named executives even though the prohibition against Bills of Attainder

I am not sure Congress has written a sufficiently broad law as to not have a serious challenge in the courts. Taking into consideration the make-up of the Supreme Court it may well not hold up to a constitutional challenge.

by jsfox 2009-03-23 12:21PM | 0 recs
yeah, I also cringe at agreeing with Jacob

But, this bill stinks, and I did a whole dairy about this being the Democrats Schaivo moment.

It's not for nothing they didn't go for 100% of the money, some sharp lawyer told them that approached a fine, and punishment is one of the legal criterions that makes a bill of attainder suspicious. But, that is just a trick, and SCOTUS doesn't like cleverness in the laws being used to scoot around consitutional issues.

I think many on the court WOULD have problem with this, not only because of the bill of attainder but by a balancing test?

We are setting a precident here that Congress can use its tax laws to quell populist rage IMO.

These Congress critters KNOW this is .05% of the stimulus money, there is NO over-riding social harm this is correcting.

It's punishment, pure and simple.

And, it completely blankets ALL these people without any consideration that most had legal contracts and did nothing wrong.

I also think it's probably unconsitutional, but I suggested an Executive order, stopping all bonuses and putting them under committee review, and putting someone like Warren Buffett in charge of the committee.

At least THEN we are not mass targeting a small group of individuals without any differentiation.

Sure, the Republicans would bleat like Sheep that the President should not interfer with Business compensation, but at least HE is not covering his ass as much as these congress critters.

Well, maybe he is covering Tim Giehtners ass....

by WashStateBlue 2009-03-23 12:31PM | 0 recs
More flying pigs!

Who knew?

by Milo Millipede 2009-03-23 12:35PM | 0 recs
Re: yeah, I also cringe at agreeing with Jacob

There's no balancing test for a bill of attainder - it either is one or it isn't.  Also, as I think we discussed in the other thread, the Supreme Court has endorsed the general principle of retroactive tax legislation, which presumably would dilute the penal aspect.

by rfahey22 2009-03-23 03:10PM | 0 recs
Re: yeah, I also cringe at agreeing with Jacob

Yes, but I think I am still standing on that fact this is greyer then we think it is.

AND, you and I know, Alito, Roberts, etc, are under NO pressure from angry consituants, and they have to really dislike a selective tax like this? From the congress reaching INSIDE a business?  And negating legal contracts?

I have seen those guys in action, and they are not so much culture warriors, they are stone cold Free Market True Believers!

What is the REAL purpose of this tax?

What social good is it doing?

What do you think it's for?

No, it IS punishment, it is our congress critters responding to an angry mob of populism.

Again, they are negating legit contracts for what useful purpose?

The money is there, this is not a company in recievership.

Let me ask you this.

if AIG itself just said, "We are not paying your legally contracted bonus" would you think, abstracted from these circumstances, these people would have a case in court?

by WashStateBlue 2009-03-23 03:19PM | 0 recs
Re: yeah, I also cringe at agreeing with Jacob

If AIG said that, then certainly they would have a breach of contract action (of course, if the tax were in place when AIG said that, then they may not want to incur the legal fees of litigation because they would have no bonus to show for it, even if they won).

I understand that someone could make an argument that sounds plausible.  And, I don't even necessarily agree with this legislation anyway.  But, if people want this passed, then shouldn't they see it through on the judicial end?  Especially when there have only been a handful of cases, and none really on point, when a court has struck down legislation as a bill of attainder?  I personally would be willing to test it in front of the Supreme Court - keep in mind that these same people also detest legislative history and substantive due process.  It's not clear to me that all of the intangibles break the way of the AIG employees.

by rfahey22 2009-03-23 03:31PM | 0 recs
Re: yeah, I also cringe at agreeing with Jacob

No, it IS punishment, it is our congress critters responding to an angry mob of populism.

So taxpayers refusing to pay wall street executives millions of dollars is a punishment?

by world dictator 2009-03-23 09:23PM | 0 recs
Re: yeah, I also cringe at agreeing with Jacob

You can choose to analyze this issue any way you want, but that does not affect the constitutional analysis.  These issues were discussed in your previous diary.  I don't know why you are holding to your novel, unsupported analysis.  An important issue to bear in mind here is that we want to ensure that the court does not infringe upon the legislature's power to create laws.  The attainder clause has been and likely would continue to be defined strictly in order to avoid overreaching.  If the court took a view such as yours, it would open the floodgates to attainder challenges on nearly every law passed by congress.  This was not the intention of the clause and the court would agree with that.

by orestes 2009-03-24 04:45AM | 0 recs
Hey Foxie!

There must be flying pigs all over the sky!

Anyway, it's commendable that you can get past our diametric opposition on almost every political issue (or, at least, everything about Obama), when the right occasion comes along!

by Milo Millipede 2009-03-23 12:33PM | 0 recs
dammit

I...agree...also. Arg.

Punitive taxation is some scary shiznit. Ironically enough, NOW would be the time for one of those ridiculous tax tea parties - except that everyone who would show is too busy being suffused with populist rage.

by Neef 2009-03-23 12:56PM | 0 recs
You know, there is probably some sad little AIG

Employee, a receptionist or some other completely blameless individual that just got a $1k or 2K bonus pulled.

Collateral damage of our Congress Critters CYA action here....

by WashStateBlue 2009-03-23 01:32PM | 0 recs
Re: Academic

The Senate won't leave it in its current form, and Obama is a Constitutional Law Professor. He won't sign it if it's flawed.

Political theater. Useful for the purpose intended.

by QTG 2009-03-23 02:29PM | 0 recs
Not clear at all

that this is a bill of attainder.  Gov't trying to get its money back is not punitive; there's no intent to punish, just an intent to recoup public funds.  Quoting generalized language from a few cases doesn't get you anywhere.  In my experience, federal judges are far more impressed by than broad and vague statements of principle.  Are there any cases where a post-facto tax on employee payments by a private company receiving federal subsidies was held to be a bill of attainder?

by JJE 2009-03-23 03:54PM | 0 recs
Re: Not clear at all

What about any cases where a tax has been considered a punishment?  Taxes as punishment sounds more like a GOP talking point to me.

by alamedadem 2009-03-23 06:27PM | 0 recs
There is no question

that this is punitive. I've never seen a clearer reaction to populist anger. Now, whether it can be gussied up and presented as non-punitive is another matter.

by Neef 2009-03-23 07:30PM | 0 recs
Re: There is no question

Every tax is punitive at some level.  That doesn't bring it under the attainder clause.  Congress passes many laws in response to populist anger.  Do you really think the court is going to open all of these acts to judicial review under the attainder clause?  I wouldn't hold my breath.  

by orestes 2009-03-24 04:47AM | 0 recs
I really don't see

How "every tax is punitive" is a supportable positon. The government is certainly not punishing me for working, clearly that is not it's intent. It simply needs income, and my work is a source of that income.

The government does not need this income, it wants to prevent AIG from having it. That is a huge difference.

by Neef 2009-03-24 08:14AM | 0 recs
Re: I really don't see

No, it wants AIG to have the money but to use it differently, as it was intended, to fix the kinks so banks can start loaning again.

It is not a punishment, it is taking back what they gave because the terms of the deal were clearly not followed by AIG.   IMO it is no different than getting a loan for a bank to buy a car and instead I use it to go to vegas.  The bank will likely call in that loan immediately as it would not be tied to any asset, and they'd be right and justified and I would get no relief from the court.  

by KLRinLA 2009-03-24 12:53PM | 0 recs
Re: The AIG Bonus Tax is a Bill of Attainder

Here's a relevant passage on the application of bill of attainder protection

Nixon v. Administrator of General Services

Brown, Lovett, and earlier cases unquestionably gave broad and generous meaning to the constitutional protection against bills of attainder. But appellant's proposed reading is far broader still. In essence, he argues that Brown establishes that the Constitution is offended whenever a law imposes undesired consequences on an individual or on a class [p470] that is not defined at a proper level of generality. The Act in question therefore is faulted for singling out appellant, as opposed to all other Presidents or members of the Government, for disfavored treatment.

Appellant's characterization of the meaning of a bill of attainder obviously proves far too much. By arguing that an individual or defined group is attainted whenever he or it is compelled to bear burdens which the individual or group dislikes, appellant removes the anchor that ties the bill of attainder guarantee to realistic conceptions of classification and punishment. His view would cripple the very process of legislating, for any individual or group that is made the subject of adverse legislation can complain that the lawmakers could and should have defined the relevant affected class at a greater level of generality. [n31]

Furthermore, every person or group made subject to legislation which he or it finds burdensome may subjectively feel, and can complain, that he or it is being subjected to unwarranted punishment. United States v. Lovett, supra at 324 (Frankfurter, J., concurring). [n32] [p471] However expansive the prohibition against bills of attainder, it surely was not intended to serve as a variant of the equal protection doctrine, [n33] invalidating every Act of Congress or the States that legislatively burdens some persons or groups, but not all other plausible individuals. [n34] In short, while the Bill of Attainder Clause serves as an important "bulwark against tyranny," United States v. Brown, 381 U.S. at 443, it does not do so by limiting Congress to the choice of legislating for the universe, or legislating only benefits, or not legislating at all.

by world dictator 2009-03-24 05:12AM | 0 recs
it is neither an

ex post facto law, nor is it a bill of attainder.

Generally: A statute which imposes a tax is not unconstitutional per se merely because it is retroactive in its language or in its operation

Examples of cases saying that it is not necessarily unconstitutional.

General Telephone Co. of Illinois v. Johnson, 103 Ill. 2d 363, 83 Ill. Dec. 133, 469 N.E.2d 1067 (1984);
Opinion of the Justices, 370 A.2d 654 (Me. 1977)

Replan Development, Inc. v. Department of Housing Preservation and Development of City of New York, 70 N.Y.2d 451, 522 N.Y.S.2d 485, 517 N.E.2d 200 (1987)

Pabst v. Commissioner of Taxes, 136 Vt. 126, 388 A.2d 1181 (1978)

Japan Line, Ltd. v. McCaffree, 88 Wash. 2d 93, 558 P.2d 211 (1977).

but there must be some limit to the legislature's ability to tax past events (like it cant be over a very long period of time).
Case:
Philadelphia Life Ins. Co. v. Com., 454 Pa. 157, 309 A.2d 811 (1973).

Lastly -
A court must consider nature of tax measure and circumstances leading to its adoption before court may determine that its retroactive application is so harsh and oppressive as to transgress constitutional limitations.

SO harsh and oppressive is the test of constitutionality, not retroactivity.

by sepulvedaj3 2009-03-24 05:32AM | 0 recs
rather

Is ONE of the tests on constitutionality

by sepulvedaj3 2009-03-24 05:44AM | 0 recs
Re: it is neither an

You forgot United States v. Carlton (92-1941), 512 U.S. 26 (1994) slackass ;-)

This is what happens when people don't read my blog!

by world dictator 2009-03-24 05:59AM | 0 recs
lol thats

why i went back and said one of the tests.  

you can only do so much while in class though :)

by sepulvedaj3 2009-03-24 06:22AM | 0 recs
It is not

the retroactive nature of this tax that's the problem, it is that the tax is solely punitive in nature. In this instance, taxation is not serving as an income source for the government. This is clear, because a bill banning bonuses would achieve the same aim as this tax. A bill banning grocery sales would NOT serve the same purpose as a grocery sales tax, so in that case income is the purpose of the tax.

Now just to be clear, I'm not arguing how a judge will rule. That's the bailiwick of the lawyers. But intent of the tax is clearly unconstitutional.

by Neef 2009-03-24 08:29AM | 0 recs
Well thats arguable.

While it would have had the same effect, at least retroactive tax has been recognized as legitimate whereas the government interfering in private contracts... well not so much.

by sepulvedaj3 2009-03-24 11:27AM | 0 recs

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