The Constitutionality of Taxing Bonuses (Balkinization)

[chill_wind]

Monday, March 23, 2009

The Constitutionality of Taxing Bonuses

JB

The short answer is that the current plans from both the House and the Senate appear to be constitutional. The House plan is here; a summary of the Senate plan is here

There are five possible constitutional limitations that might be relevant.

(snipping-- he goes on to clear those arguments, including #5)

Finally, there is no problem under the Bill of Attainder Clause because the tax does not single out specific individuals for punishment; in addition it is both prospective and retrospective in application. First, the tax defines the class to which it applies to an abstractly defined group rather than naming particular individuals. It applies to persons working for enterprises that have received emergency government subsidy; it is not aimed at particular companies or specific employees. Second, the tax is for a regulatory purpose, as described above, and not for a punitive purpose. Preventing misuse of government funds, limiting bad incentives, and avoiding moral hazard are regulatory purposes, not punitive purposes. The fact that isolated members of Congress may have expressed an impermissible punitive or retributive purpose does not mean that the tax violates the Constitution if the text of the bill on its face has an overtly regulatory purpose. Third, the tax is both prospective and retrospective in its targets, which is consistent with a regulatory as opposed to a punitive purpose.

It is worth noting that the fact that the proposed taxes are constitutional does not mean that they are necessarily good public policy.

http://balkin.blogspot.com/2009/03/constitutionality-of-taxing-bonuses.html

I post this offering I just came across as there was considerable discussion/speculation on this a couple weeks ago.

Jack Balkin

(His Thomas links don't presently work-- I had to find the bills at GovTrack)