"Responding to the anger about bonuses paid to AIG traders, the House approved a bill Thursday that would impose a punitive 90% tax on bonuses paid by American International Group Inc and other financial companies that receive federal help. The vote was 328-93. The bill would apply to bonuses of people making more than $250,000 a year, and would apply only to payments from companies getting more than $5 billion from the federal government."
From James Madison:
"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community."
Ol' James Madison had the right of it. The Congress is acting in violation of the US Constitution, pass an ex post facto law punishing those being paid bonuses as per their contracts. I may not like the fact that some working for AIG are getting bonuses they may not deserve, but others working for other divisions within AIG, divisions still making money and not part of the default credit swap debacle, are being penalized by a capricious, emotional, and ignorant Congress. The contracts they have with AIG require payment of those bonuses, unless Congress feels they have the power to break those contracts. But if someone within AIG takes the government to court, Congress may find it is not the ultimate power.
Article I, Section 9 of the US Constitution states, “No bill of attainder or ex post facto Law shall be passed.” But that's exactly what this punitive tax on those bonuses happens to be.
Article I, Section 8 of the US Constitution states, “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.” But this law is aimed at one small group of people for the purposes of punishing them, even those innocent of even perceived wrongdoing. It's more of a “we'll show you, you greedy bastards!” move. It sets a bad precedent, because if they get away with it this time, they'll do it again to another group they don't like. The looting will have begun.
Of course to those in Congress and the White House, the Constitution is a “living document”, meaning they can ignore the parts they don't like.
(Stolen shamelessly from Maggie's Farm.)