H.R.1586 - To impose an additional tax on bonuses received from certain TARP recipients. Sponsor: Charles Rangel / 111th Congress

Title
111th Congress - To impose an additional tax on bonuses received from certain TARP recipients.
Summary
To impose an additional tax on bonuses received from certain TARP recipients. (by CRS)
Status
The bill was voted on in the House on March 19, 2009

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Everyone is furious, but is a bonus tax really the answer? by Karen Chung, Mar 26, 2009 (10:50pm)

Although critics of the AIG bonus tax wonder about its constitutionality, some scholars say it is not necessarily unconstitutional. Although its purpose is to target AIG’s bonus recipients, the language of the bill does not only target AIG, but those who received bonuses from “certain TARP recipients.” However, because the bill is intended to target a specific group of people, it violates the spirit of the Constitution and its prohibition on bills of attainder. Also, because the legislation attempts to impose a retroactive tax, which is legal, the argument that the bill violates the Constitution’s prohibition on ex post facto legislation is inaccurate.

The House was very quick to pass the bill to please a furious crowd. However, the Senate will probably take into account President Obama’s opposition to the tax and alter the bill into a more moderate piece of legislation that the President can sign.

Whether the bill passes or not, it is important to recognize that Congress failed to foresee the problem and include a measure to limit bonuses. Many view the bonus tax as an attempt by Congress to divert the attention away from its own mistakes by using AIG employees as scapegoats. Critics of the bill argue that many of these employees probably already invested their bonuses and have no way of paying a 90% tax. According to Rep. John Campbell, in some states, bonus recipients may have to pay back more than what they received.

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