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1 Joseph Henchman, Proposed Tax on AIG Bonuses Raises Constitutional and Policy Concerns 1 (2009)

handle is hein.taxfoundation/ffbgfxz0001 and id is 1 raw text is: F CT FONATOFISICAL March 2009 FC No. 165 F Proposed Tax on AIG Bonuses Raises Constitutional and Policy Concerns By Joseph Henchman 90% Tax May Violate Bill of Attainder Clause and Sets Dangerous Precedent I. Introduction On March 19, 2009, the U.S. House of Representatives voted 328 to 93 to pass H.R. 1586, which imposes a 90% income tax on bonuses earned by employees who work at a company that received an aggregate of $5 billion in federal TARP bailout funds, including specifically Fannie Mae and Freddie Mac. The tax is in lieu of the regular income tax and alternative minimum tax, and applies either to any compensation not received as part of a regular wage or benefit, or to all income exceeding $250,000, whichever is lower. If enacted, the additional tax would be retroactive to January 1, 2009, but any employee who waives or returns the bonus before the end of 2009 would have the surtax waived. The day after the House action, Sen. Judd Gregg (R-NH) did not use the word unconstitutional but derided the bill as a proposal to use the taxing authority of the government in a manner that is arbitrary, punitive, and targeted on a single group of people who they have deemed as having acted improperly.' Two days later, while appearing on the news program 60 Minutes, President Barack Obama (D) also criticized the bill: Well, I think that as a general proposition, you don't want to be passing laws that are just targeting a handful of individuals. You want to pass laws that have some broad applicability. And as a general proposition, I think you certainly don't want to use the tax code to punish people.'2

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