How Not To Tax TARP Recipients
March 22, 2009, 4:58 pm
Filed under: Ian | Tags: ,

I’ve spent the last few hours re-reading the Supreme Court’s Bill of Attainder decisions, and my initial impression is that the constitutionality of the TARP recipient bonus tax is a very close call—one that will ultimately rest upon how broadly the tax sweeps (the broader the better, for constitutional purposes), and whether or not the tax is determined to have a punitive purpose.

I will give one word of advice, however, to any Members of Congress who support the bill and want to maximize the likelihood that it will survive constitutional scrutiny: quit it with statements like AIG needs to be “held accountable” or that AIG’s actions are “outrageous.” One thing that the Supreme Court pays very close attention to is whether the Members who support the bill made statements suggesting that they intended it to punish an identifiable group. If the Court determines they did intend such a purpose, the bill is a goner. So if any more Members are thinking about making floor statements regarding this bill, they would do well to say things like “this is not about AIG, this is about protecting taxpayer dollars,” or “I’m happy to support this regulatory tax which regulates TARP recipients in a regulatory way that is really, totally regulatory.”

Going on the House or Senate floor and saying implying the tax is intended to punish anyone is practically begging the Court to strike it down.


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[…] attainder This weekend, I argued that supporters of a tax on bonuses paid to companies like AIG are shooting themselves in the foot by making statements suggesting that the tax is intended to punish.  Apparently, Professor Larry […]

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