In the latest development stemming from the AIG executive compensation mess, Congress passes a bill to tax at a higher rate of executives and employees of companies receiving TARP funds. The Democrats are eager to clean up this mess, therefore wasting no time to draft this legislation and put it to a vote.
But aside from the glaring tactic of political distraction, this piece of legislation should be a cause of concern for everyday Americans. Congress is essentially wearing the hat of a judge, determining who is guilty, and using confiscatory tax rates as punishment.
Andrew Grossman at The Heritage Foundation has a very good analysis:
Whether the legislation before Congress is a bill of attainder, and therefore unconstitutional, is a difficult question not susceptible to any certain answer under existing judicial precedent. But whatever the answer, the legislation does raise strong constitutional concerns animated by the purposes of the prohibition on bills of attainders. The legislation (H.R. 1586), as introduced by Rep. Charles Rangel (D–NY), would apply to income received in 2009 and thereafter by employees of companies receiving more than $5 billion in federal bailout funds, as well as to Fannie Mae and Freddie Mac. The bill defines a new class of income, “TARP Bonus,” that consists of any compensation payments in excess of a periodic wage and any income for such employees in excess of $250,000, or $125,000 for married individuals filing separate returns. Under the legislation, any “TARP Bonus” would be taxed at a 90 percent rate.Article I, § 9, of the Constitution states: “No bill of attainder or ex post facto Law shall be passed.” The prohibition has several purposes. First, it enforces the Constitution’s separation of powers, thereby protecting individual rights. The judiciary, not the legislature, is the branch that judges the application of the law to specific individuals and entities, resolving the disputes before it on an individualized basis and ensuring that each case is afforded due process. For Congress to adjudge specific parties guilty and due certain punishment would necessarily intrude on this power. The result, as the Framers well knew from the country’s colonial experience, would be legislative tyranny: Britain’s parliament regularly enacted laws naming or describing particular individuals and sentencing them to death for some asserted infraction, usually treason.
And that’s just the start. Read the whole thing… Congress may be crossing its boundaries here.
