Motley Moose – Archive

Since 2008 – Progress Through Politics

Is Congress using a Bill of Attainder to get A.I.G.?

So with little argument and a 300-plus majority, Congress yesterday voted to tax bonuses given by companies (read “A.I.G.”) funded under TARP at 90%, thus recovering the multi-million dollar awards to anyone in these companies earning over half a million bucks in regular income. The fact that this was targeted at TARP recipients in general was an attempt to generalize the law… and not make it, as it clearly is, a focused punishment of a particular company.

Essentially, this is what is referred to as a Writ or Bill of Attainder, and which is specifically banned in the Constitution.

A bill of Attainder is legislative act that singles out an individual or group for punishment without a trial. Article I, Section 9, paragraph 3 specifically states: “No Bill of Attainder or ex post facto Law will be passed.”

James Madison, writing in the Federalist Papers (Number 44) in 1788 stated:

“Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. … The sober people of America are weary of the fluctuating policy which has directed the public councils.  They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community.”

The complaints of a majority of Americans against the contracts agreed to by A.I.G. (and, for that matter, Fanny and Freddie) are solid and reasonable, but taxing them in this specific manner is likely to be unconstitutional.

Congress is really trying to cover up its unfortunate involvement in letting all this happen in the first place… a triumph of hpocrisy.

There had better be another, legal solution.

Under The LobsterScope


  1. rfahey22

    I haven’t reviewed the relevant materials in quite a long time, but as I recall it is very difficult for legislation to be considered an unconstitutional bill of attainder.  Essentially, the bill has to identify the parties it intends to punish by name.  As I understand it, this legislation is broadly worded and would also apply to other bailout recipients, should they give out bonuses.  I don’t think that anyone would argue that Congress cannot use a real-world example to fashion laws of general applicability.

    I had forgotten, and bruh3 reminded me over at MyDD the other day, that the Ex Post Facto Clause has been interpreted to apply only to criminal statutes.  So, that probably doesn’t apply.

    The AIG employees may also argue that the law violates their substantive due process rights under the Due Process Clause of the Fifth Amendment by retroactively eliminating their property rights in the bonuses.  As a general matter, Congress may pass retroactive tax legislation – United States v. Carlton, 512 U.S. 26 (1994).  That case involved the closing of a loophole in a tax deduction that Congress had created.  Congress made the closing of the loophole retroactive to the date that the deduction was enacted, one year beforehand.  Now, Booman over at Booman Tribune thinks that this completely forecloses the Fifth Amendment argument, but I’m not so sure.  Specifically, this quote from the decision gives me pause:

    In holding the 1987 amendment unconstitutional, the Court of Appeals relied on this Court’s decisions in Nichols v. Coolidge, 274 U.S. 531 (1927), Blodgett v. Holden, 275 U.S. 142 (1927), and Untermyer v. Anderson, 276 U.S. 440 (1928). Those cases were decided during an era characterized by exacting review of economic legislation under an approach that “has long since been discarded.” Ferguson v. Skrupa, 372 U.S. 726, 730 (1963). To the extent that their authority survives, they do not control here. Blodgett and Untermyer, which involved the Nation’s first gift tax, essentially have been limited to situations involving “the creation of a wholly new tax,” and their “authority is of limited value in assessing the constitutionality of subsequent amendments that bring about certain changes in operation of the tax laws.” United States v. Hemme, 476 U. S., at 568.

    Here we arguably have the creation of a “wholly new tax,” and so I wonder if a court would see fit to breathe life into that long-abandoned case law.

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