Friday, March 27, 2009

The Bonus Tax is Probably Constitutional but Shouldn't Be

According to , Richard Epstein the bonus tax - the tax intended to hit the recipients of the notorious AIG bonuses - is constitutional but shouldn't be. The Supreme Court has ruled that when Congress makes its intent known to pass this kind of legislation, the argument that intended target of such legislation was singled out unfairly holds no water. The poor sap had plenty of notice, why didn't he do something about it? pretty much sums up the position of the Court.

But Epstein points out:
Double crosses are now fair game. In good times they won't happen, because sensible legislators know that capital and labor will flee our shores if we engage in senseless acts of plunder. But these are not ordinary times, nor is this an ordinary Congress. The $165 million in bonus payments may be small potatoes compared to the $700 billion at stake in the AIG bailout, no less to the damage caused when investors, foreign and domestic, lose confidence in our institutions. But populist fury and Congressional fecklessness continue.

People are right to ask when this cycle will end. Can Congress pass retroactive tax increases on all high-income earners? Can it give tax breaks to TARP-friendly banks as it hammers those who stay out of its bailout clutches?

Who knows? But if Congress doesn't stop its descent into the abyss, the Court should confess its past sin of constitutional passivity and stop it for them.

No comments:

Post a Comment