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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Alan Smithee who wrote (297386)	3/20/2009 9:28:27 PM
From: KLP	Read Replies (1) \| Respond to of 793843

Courts Unlikely to Strike Down AIG Tax Law, Legal Experts Say bloomberg.com By Greg Stohr March 20 (Bloomberg) -- Courts probably will uphold Congress’s effort to tax employee bonuses at American International Group Inc. and other companies receiving federal bailout funds, several legal experts said. The House yesterday voted 328-93 in favor of a 90 percent tax on bonuses, including the $165 million insurer AIG paid last week after receiving $173 billion in bailout funds. The Senate plans to vote next week. The measure raises a number of legal questions, and New Hampshire Republican Senator Judd Gregg yesterday said the legislation was unconstitutional. Still, any legal challenge will meet a significant obstacle: the historic reluctance of the Supreme Court to second-guess Congress on tax issues. “Given the state of the law, it will be unlikely that the Supreme Court will strike down this legislation,” said Edward McCaffery, a University of Southern California tax-law professor who says he questions the wisdom of the proposal. Gregg said the legislation would violate the constitutional ban on bills of attainder, or laws that single out individuals for punishment. “It’s basically targeted on a small group of people,” he said. The House took several steps to shield the measure from that argument, said Laurence Tribe, a constitutional law professor at Harvard Law School. General Language The measure doesn’t single out employees at AIG and instead uses general language affecting all companies receiving more than $5 billion in federal bailout money. Bonuses for employees at Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley would be affected. Tribe also pointed to a provision in the measure exempting executives at companies that repay enough bailout funds to reduce the government’s investment below $5 billion. That provision “makes it clear that the goal is not to punish corporate executives generally, but is simply to ensure the appropriate use of government funds,” Tribe said in an e- mail. The bill-of-attainder clause is one of the Constitution’s least-invoked provisions. The Supreme Court in 1946 cited the clause in striking down a law that barred three specified federal employees from receiving their salaries. Congress had concluded that the three engaged in subversive activities. In 1977, the Supreme Court said Congress didn’t violate the bill-of-attainder clause when it passed a law taking control of tapes recorded by former President Richard Nixon. Telecommunications Law More recently, the high court in 1999 rejected two appeals that said a 1996 telecommunications law was a bill of attainder because it barred regional Bell phone companies from providing long-distance and other services. “Courts have been fairly deferential to Congress if the language is written in sufficiently general terms,” said Jonathan Adler, a law professor and director of the Center for Business Law and Regulation at the Case Western Reserve University School of Law in Cleveland. McCaffery, who teaches at USC’s Gould School of Law in Los Angeles, said opponents also would be able to press a legitimate -- if not ultimately successful -- argument against the measure based on the Constitution’s due-process clause. That argument would bear similarities to those based on the bill-of-attainder clause. Opponents would have to show that Congress imposed punishment, bypassing the criminal court system. That argument would pass the “laugh test,” McCaffery said. Even so, he said, “you’re swimming upstream because of the general tendency of the courts to stay out of tax legislation.” Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said yesterday he believed the legislation would pass constitutional muster. “We’ve pushed the constitutional question pretty hard with constitutional experts and we think it’s okay,” he said. To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net. Last Updated: March 20, 2009 16:26 EDT