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Senators, Scholars Question Plan To Tax AIG Bonuses

Publication Date: 
March 23, 2009
USA Today
David Jackson

Professor Joseph A. Bankman is quoted in USA Today in an a story about the legality of a measure passed by the House of Representatives that would tax employee bonuses paid by companies that recieve federal bailout money:

Joseph Bankman, a law professor at Stanford University, said Congress just has to make sure that the legislation can apply to employees of companies beyond AIG. Bankman also said Congress needs to specify a public purpose, in this case safeguarding federal money.

"You never know the answer until something is litigated," Bankman said. "But in general, the Constitution gives Congress the right to make the tax laws."

Bankman and other scholars said a major issue in potential lawsuits is what the Constitution calls a "bill of attainder," which is when a legislative body singles out an individual or group for punishment. In 2002, a federal appeals court struck down a New York law that prohibited Consolidated Edison from charging customers for costs related to a shutdown of a nuclear power plant.