House passes bill taxing AIG, other bonuses

[The Brain]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

I think the legal theory is that it's not retroactive because the taxes aren't actually due until the next year.

America = epic fail

[grumbler]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

IIRC, there was a USSC case on this early in Clinton's term, whereby they allowed a tax increase in the current year because Clinton campaigned on it and they deemed that "fair notice."  It was a very narrow decision, though, and explicitly announced as setting no precedent.  Dunno how they will rule on this, but my guess is that legal costs will exceed tax revenues.

Like the russian bear growls, though, this is being done not because it is right or wise, but because it plays well with an ill-informed electorate.  The House doesn't care if it ever takes effect; even if struck down, they "get dredit for trying."

[DontSayBanana]

They did address it in the bailout bill, and Obama's administration insisted on adding language protecting these kinds of bonuses.

Dodd says the administration pressured him. Obama said blame me personally. Dodd also said the day before that he didn't know how the language got in there, and thinks we don't keep records or anything and automatically buy the "my comments were misconstrued" b.s. Obama's also been known to redirect heat from Geithner.

Basically, it smells to me as though, for whatever reason, Obama's covering Dodd's ass. Dodd has to know that with all his contributions from AIG, it doesn't look good for him.

[dps]

IIRC, there was a USSC case on this early in Clinton's term, whereby they allowed a tax increase in the current year because Clinton campaigned on it and they deemed that "fair notice."  It was a very narrow decision, though

I don't recall that, but if that's correct, making a ruling on the basis of someone's campaign promise stikes me as really bad law.

[alfred russel]

"Tax loopholes" are closed all the time in ways that apply to the current tax year. Those don't always even have a campaign pledge behind them--the rules are just changed when someone notices the loophole.

[PDH]

I've said it before, I'll say it again:  we should tax all foreigners living abroad.

[The Minsky Moment]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

IIRC, there was a USSC case on this early in Clinton's term, whereby they allowed a tax increase in the current year because Clinton campaigned on it and they deemed that "fair notice."  It was a very narrow decision, though, and explicitly announced as setting no precedent.

That is close -- there was a Supreme Court case on this issue in 1994 -- United States v. Carlton - and it did attract a lot of attention b/c of the Clinton tax which had just been passed.  But the case actually dealt with different retroactive legislation from 1987 which disallowed an estate tax deduction. 

US constitutional law is pretty clear that the Ex Post Facto clause only relates to criminal legislation.   So tax changes with retroactive application are analyzed under the rule of constitutional due process.  The test is that the legislation must employ rational means to achieve a legitimate legislative purpose.  The Carlton case does suggest that a "wholly new tax" may be analyzed more stringently then clarifying amendments to existing taxes, although that appears to be dictum.  Interestingly, Scalia and Thomas wrote a dissent where they stated that they thought that the retroactive application was unreasonable, but concurred in the judgment b/c they did not accept the doctrine of substantive due process.

Focusing on the 90% tax proposal, I think it could be a very interesting and close case on due process grounds.  Not sure exactly how it would come out.

[Ed Anger]

I've said it before, I'll say it again:  we should tax all foreigners living abroad.

And then nuke the moon. or Portugal.

[The Minsky Moment]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

Well the United States has a written constitution.  If the constitution grants the government authority to pass certain legislation, a court can't deny it because it finds the principle upsetting to its scruples.  That also is a mainstay of the rule of law, is it not?

[grumbler]

[US constitutional law is pretty clear that the Ex Post Facto clause only relates to criminal legislation. 

I will confess that I have always found the reasoningbehind Calder v. Bull suspect.  When the Constitution bans something ("No State shall ... pass any Bill of Attainder [or] ex post facto Law") and the USSC wraps itself in knots to show that the Constitution does not mean what it says, I find this disturbing.

It is also interesting that the logic the court used to find that the other phrases of Article I section 10 negated the prohibition on ex post facto laws for civil cases (as I understand the ruling, anyway:  the logic the court used is somewhat opaque) was also later used to apply to the section 9 prohibition which contains none of the phrases.

I would argue that it is pretty clear that the Constitution flat prohibits ex post facto laws, but that the courts don't want to enforce this prohibition for fear of sparking a controversial showdown with a Congress and state legislatures that desire such a power.

[jimmy olsen]

Seems like AIG paid out more bonuses than initially reported.

http://www.msnbc.msn.com/id/29812224/

[Sheilbh]

God I think this is a horrible idea.  I hope it's vetoed, if it passes the Senate.

[jimmy olsen]

God I think this is a horrible idea.  I hope it's vetoed, if it passes the Senate.

Unlikely in the extreme.

[Martinus]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

Well the United States has a written constitution.  If the constitution grants the government authority to pass certain legislation, a court can't deny it because it finds the principle upsetting to its scruples.  That also is a mainstay of the rule of law, is it not?

In Poland, for example, it is interpreted from article 1 of the constitution which states that "the Republic of Poland is a democratic state operating under the rule of law.", so as you can see there is a room for interpretation there.

[grumbler]

God I think this is a horrible idea.  I hope it's vetoed, if it passes the Senate.

Take a look at this http://www.gallup.com/poll/116941/Outraged-Americans-AIG-Bonus-Money-Recovered.aspx Gallup poll from the 17th to understand why even Republicans (who nominally say that the government should be limited) want this irresponsible legislation to pass.  Even 2/3 of Republican voters say that the bonuses should be blocked or recovered.

Bumper-sticker thinking has always led to bd law.  First with the "stimulus" and "rescue" plans, and now with the bonus taxation.