The Running Tally

[Trollbait]

It would have to wind its way to the USSC and the plaintiffs would get absolute hell for publicity.

It would not take a case like this very long to reach the Supreme Court.

It's also debatable whether it's a bill of attainder, after all, how is it really different from any tax increase designed to target segments of the community.

1) It is retro active. Ex post facto.

2) The clear intent is punitive in nature as evidenced by statements made by congress irregardless of the bills language.

3) The targeted segment is sufficiently narrow to suggest a bill of attainder.

There are USSC cases dealing with bills of attainder ...

Cummings v. Missouri, 4 Wallace 277 (1866)

“A bill of attainder, is a legislative act which inflicts punishment without judicial trial and includes any legislative act which takes away the life, liberty or property of a particular named or easily ascertainable person or group of persons because the legislature thinks them guilty of conduct which deserves punishment” [yet for which no court has adjudged them guilty].

I would suggest that any reasonable person would just such a motivation behind the bill passed by the House.

And it doesn't seem to be a "bill of attainder" as they aren't criminalizing anything.

Criminalization is clearly not necessary for it to be viewed as a bill of attainder or ex post facto according to the above cited case law. Please note the highlighted text.

[Embar Angylwrath]

It is, however, ex post facto.

[Lurker]

How so? Congress is changing the current tax law. The bonuses are being paid out now. When they file their taxes next year they will be subject to the new tax law.

Do I have that wrong?

[Embar Angylwrath]

My understanding is Congress is making this law retroactive so it will include the AIG bonuses. Publicly, they've made it the driving purpose of the law, so its in response to, and an attempt to tax, an event that preceded the law.

It will hold for future events of this type I think, but the AIG guys will slide.

[Lurker]

I'll have to research that. I don't see why they would need to make anything retroactive since the bonuses are being paid now, under the current tax year, and would be subject to whatever tax law is in place at the time of filing.

When Congress changes a tax rate mid-year you don't pay the old rate on earnings prior to the change, and the new rate on earnings after the change... you pay whatever the rate is at time of filing.

====

Jecks,
Interesting. Definately worth looking into further.

[Trollbait]

How so? Congress is changing the current tax law. The bonuses are being paid out now. When they file their taxes next year they will be subject to the new tax law.

Do I have that wrong?

That will probably be the argument of the government but the Court has a habit of being able to view it for what it is. A method of circumventing established precedent with linguistic and technical tomfoolery.

It is not even arguable that the intent is to retrieve the money that has already been paid because Congress and the public view those payments to be wrong. They are taking the role of the judicial upon themselves and that is the very heart of an ex post facto law. It is a bill of attainder disguised as new tax code but no one has any doubt as to who it is directed at.

Congress has a legal avenue of redress in the form of litigation, not legislation, to retrieve the money. As much as I want that money back passing this kind of vigilante populist legislation is a horrible slippery slope.

As to Ddrak,

The plaintiffs may not catch as much hell as you might think. They could file anonymously considering the hype and death threats they have already received. It would be John Doe's v. United States Government.

[Harlowe]

Congress has a legal avenue of redress in the form of litigation, not legislation, to retrieve the money. As much as I want that money back passing this kind of vigilante populist legislation is a horrible slippery slope.

I absolutely agree with this.

[Lurker]

They are taking the role of the judicial upon themselves and that is the very heart of an ex post facto law.

Ex post facto has nothing to do with the Legislative branch taking the role of the Judicial. The Legislative Branch passes laws. That's their job. They simply can't pass a law that imposes a criminal punishement after the fact. Ex post facto applies to criminal punishment, not taxes.

It is a bill of attainder disguised as new tax code but no one has any doubt as to who it is directed at.

We all know who the target is but the law might still be broad enough to pass court scrutiny.

[Trollbait]

They simply can't pass a law that imposes a criminal punishement after the fact.

My citation does not specify that the punishment has to be criminal one. It states that a legislative act that deprives a person of property because of an act that the legislature deems punishable is a bill of attainder. The bill of attainder argument is very strong one that the tax congress has passed is unconstitutional.

As to the ex post facto argument,

In Calder v. Bull (1798) case law was established that ex post facto applied to criminal cases and not civil ones, but I would argue that this issue has been pushed into the realm of the criminal buy congress themselves.

The very intent of the bill could be called into question. If the congress is implying that these bonuses were derived by fraud then they are declaring the act of recieving them criminal and are redressing the issue through punitive legislation.

NY State Attorney General Cuomo is pursing a fraud investigation into these bonuses. There are calls in congress to investigate the bonuses as fraud. Congress is in effect calling the bonuses criminal. If that is the case then their action is ex post facto.

We all know who the target is but the law might still be broad enough to pass court scrutiny.

Then that would be a shame since we would be giving a wink and a nod to an unconstitutional action because of popular ism........remember the Patriot Act, anyone?

[Lurker]

You keep mixing my response to the 'ex post facto' argument with your assertions of 'bill of attainder'. Stop that.

NY State Attorney General Cuomo is pursing a fraud investigation into these bonuses. There are calls in congress to investigate the bonuses as fraud. Congress is in effect calling the bonuses criminal. If that is the case then their action is ex post facto.

Wrong. Ex Post Facto arguments do not apply here. Whether Congress calls the bonuses "fraud" or "criminal" or "an affront to god and man" is meaningless. Whether people are pursuing criminal charges is meaningless. Changing tax rates is within the power of Congress and does not retroactively make a legal act illegal leading to criminal punishment. It just doesn't.

The bill of attainder is the only argument that might apply here. I'm not convinced that it's a strong argument, and the analogy with the Patriot Act is sort of weak, but it's the only argument that isn't easily dismissable.

[Trollbait]

I agree that ex post facto is weak as applied to this case.

Bill of attainder is completely viable in my opinion, however. I find the whole thing to be a huge shit sandwich.

[Embar Angylwrath]

http://www.bloomberg.com/apps/news?pid= ... =worldwide

Commentary on the "bill of attainder" argument.

[Ddrak]

The bill of attainder argument is the only viable option I can see in trying to fight it, but there's a very good chance the government would win given the arguments Lurker linked. The constitutional question would be how narrowly targetted a bill would have to be in order for it to violate that statute.

Dd

[Partha]

Most interesting.

Remember the Chrysler/GM flap? All the usual suspects were drooling at the idea of letting them fail if it meant breaking the union contracts. When pushed on it, they pretty much in unison agreed that you had to break the contracts because if they kept them, the business would fold.

Funny how the shoe goes on the other foot and they start screaming about breaking contracts when it's a white collar crook and not a blue collar worker who's getting the shaft...

[Trollbait]

Most interesting.

Remember the Chrysler/GM flap? All the usual suspects were drooling at the idea of letting them fail if it meant breaking the union contracts. When pushed on it, they pretty much in unison agreed that you had to break the contracts because if they kept them, the business would fold.

Funny how the shoe goes on the other foot and they start screaming about breaking contracts when it's a white collar crook and not a blue collar worker who's getting the shaft...

That is actually a good point. Recently I was ready an article that contended that a primary reason why the world economy is in such peril is the inability to to enforce contracts effectively. With no faith in contractual obligation there can be no faith in financial systems. I would hazard that would include union contratcs no matter how cumbersome people feel they are.

[Embar Angylwrath]

Its sort of a bullshit point, if you ask me.

When the government steps in with billions of dollars of taxpayer money, the system ceases to a be a free market system, and becomes a political one instead. Businesses cease to be run on profit motives, and instead are guided by the political wind. Its the main reason why socialized businesses mostly fail, and are always at a competitive disadvantage to other non-socialized businesses in the same industry sector. Some CEOs are just now waking up to that fact, and are trying to give back the TARP funds. They know with the TARP funds they'll never be able to run the business effectively, since on a whim the government will do something like punitive legislation as an end-around on contracts. They will fail, and they know it. Its better to struggle and have a slight chance of making it, then have the government interject chaos into market systems at the business entity level, which will eventually ensure failure.

[Lurker]

Embar,
What are you talking about? Some TARP recipients have said they want to give the money back because they don't like the extra scrutiny and restrictions, but none of them are in a position to give the money back because their "non-socialized business" failed miserably. And they failed miserably largely due to a lack of Government regulation. For a long time in this country "free market" has meant privatizing the profits and socializing the losses. This current crisis is no different. So... I have no idea where you are coming from.

Recently I was ready an article that contended that a primary reason why the world economy is in such peril is the inability to to enforce contracts effectively.

Can you link to that article. Contract enforcement doesn't seem like it's in the top 100 reasons why the world economy is in peril and I'd like to see their reasoning.

[Embar Angylwrath]

I agree wih most of your post Lurker, I think we are essentially talking about the same thing. The institutions want to give the money back to free themselves from political whim. We agree on that. Some of them would probably fail if they do. We agree on that, as well. My point is that even with the TARP funds, they will fail, because they are now at a serious competitive disadvantage with institutions that did not take TARP funds. It's absolutely true that by restricting pay/bonuses, there will be a talent drain at the time those institutions need the talent the most. The government is putting them at a competitive disadvantage, which will make it all that much harder, if not impossible, for them to stabilize.

I'm not saying they don't deserve what they're getting, they do. I just find it odd that CEOs never thought that after receiving billions of dollars in taxpayer help, their companies would be run based on political whim instead of business decisions. So my overall point is that most of the CEOs would rather give back the funds and try to make a go of it without all the government intrusion. They know they MIGHT fail if they do that, but they know that with all the destabilization the government is doing at the company level, they WILL fail.

Give back TARP funds - 90% chance of failure
Kepp TARP funds - 100% chance of failure, and dying a slow death.

[Lurker]

I've heard the complaints from the CEO's that took TARP money. They ring very hollow. For the most part, they are whining about wanting to give TARP money back because they don't want the Government looking at their asset sheets and making sure they are properly capitalized. The fact that they aren't able to pay back the loans makes the whining about it even more pathetic. We aren't talking about political whim here. This is long needed oversight.

If there's a talent drain in the industry because the idiots that got us into this mess aren't rewarded for failure with huge salaries and bonuses, I can live with that.

As for being at a competitive disadvantage... against who? Be specific.

Since they can't afford to give the TARP funds back I don't understand how you came up with those percentages.

I just find it odd that CEOs never thought that after receiving billions of dollars in taxpayer help, their companies would be run based on political whim instead of business decisions.

This statement shows a total disconnect from our current situation. The financial industry has been run with the goal of short term profits regardless of risk. How is that "business decision" working out for all of us? Again, we aren't talking about "political whim", we're talking about oversight.

[Embar Angylwrath]

I think you're missing my point.

Let me pose it as a questions....

What type of company has a competitive edge... a company that recieved TARP funds and is now subject to special restrictions on pay?

Or a company that didn't receive TARP funds and isn't subject to special restrictions?

The change in the regulatory framework is going to be applied to the entire industry, I get that. However, TARP recipients have MORE restrictions (and changing goalposts) they have to deal with as well. So that puts them at the competitive disadvantage against non-TARP recipients that don't have that added layer of restrictions and regulation. So in short, there are two levels of regulation... the first is applied industrywide, and the second is only applied to TARP recipients. Any business person will tell you that regulation that isn't applied evenly will game the market, and put the companies with the higher level of regulation at a disadvantage.

Again, I'm not saying the TARP recipients aren't getting what they deserve, but they shouldn't have expected to be treated the same as non-TARP recipients.