Congress: Not Angry, Just Disappointed

On Friday, the House passed its version of a bill that would tax AIG's bonuses at 90% (leaving the other 10% for state and local taxes). Read a brief summary of the legislation and the situation here. The bill is a response to the free-floating outrage at the enormous sums, and possibly a distraction from the fact that previous legislation allowed the bonuses. But is such a punitive and pointed tax legal?

Constitutional scholars are divided in their opinions. The Constitution prohibits both "bills of attainder" and "ex post facto" laws. Bills of attainder target specific people for punishment, but AIG is not mentioned specifically in the bill, and the tax on bonuses would apply to all companies that accepted more than $5 billion in bailout funds. Ex post facto laws punish conduct prior to the enactment of the legislation. Defenders of the bill say that only money received in calendar year 2009 will be taxed at this rate, and so they claim that it is not retroactive.

Check out the annotated portion of the Constitution that deals with these proscribed laws (prepared by the CRS, with thanks to Cornell for the hyperlinked version) and see what you think about the legality of the House legislation. But remember, the Senate has yet to weigh in on the legislative process, and the White House is already calling for cooler heads, so the question of constitutionality may ultimately be moot.