BestOfBid.com - How will applying a taxation rate of 90+% to bonuses of AIG execs stand up legally?

How will applying a taxation rate of 90+% to bonuses of AIG execs stand up legally?

I'm not asking about whether or not they deserve it. The law doesn't discuss who deserves what. I'm asking about the legal standpoint. Since the government has realized they have no legal footing to stop or seize these bonuses, they are going to try and tax it back. Can they do this? Is nobody else concerned that the government can just decide to tax away money to which people are legally entitled? This effectively gives the federal government power to break contracts at will should it be politically advantageous to do so, doesn't it? How would this play out in court?

Public Comments

It doesnt
BINGO....All this "faked" outrage over bonuses (that they KNEW about) is all a smoke screen for the Federal govt to have a "reason" to restructure corporate tax law. Get used to it, anytime obama wants to increase the powers of government a new scandal will erupt, outrage will be had, and government will be expanded. Welcome to change.
It doesn't! The government needs to get out of private business! They are attempting to set a dangerous presedent in any attempt at trying to appease the American People's outrage by further ignoring the Constitution and the law of the land. At best it shows these people are incompetent imbeciles and at worst criminals. "The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first" Thomas Jefferson
I agree with peacemons post..But aside from the smoke screen..one must realize the government will do whatever it sees fit to do..and they will always smokescreen, or spin it, to make themselves look innocent..the president is only a figurehead..in debt to the constituents who got him there...Remember the richest people in the world run our planet..As far as legality is concerned the government makes the rules and they can make any rule they feel like and make it legal..just needs to have the right spin and the right people backing it.
What you think democrats care about legal? All they have to do is get a democrat judge to ok it. Remember when the democrat candidate for senate in New Jersey was indited and it was legally to late to replace him? (Law passed by democrats) The New Jersey Supreme Court (democrats all) had no trouble finding a way to ignore that law.
Because the government makes the laws, and I think all the taxpayers that got screwed over by the current corporate welfare system standing outside the courthouse might influence the judges decision a little bit. Congress has the right under the 16th amendment to tax income from whatever source derived without regard to any census or enumeration. It's about time that the 16th amendment started to apply to the privileged class. The world would be better off if these business failures would have been allowed to fail.
Seems the new DEM GOV makes the rules as they go along>How about the CEOs that are recieving the bonuses hadn't payed there taxs for yrs so why would they pay the taxs now> Free $$$$$$$$$> What about the 65 trillion that AIG sent overseas> Get that back>
With all the outrage of the American Public about AIG there is not a judge in America that would rule on behalf of AIG.. so anything they want to do they will. Obama wants more government control in Private business and that is what he is aiming for now. Public Outrage at Private Business just helps him along the way.
What is happening is beautiful. We just need to put salary caps on these rich sob salaries. Every aspect of government needs to be in the business place, otherwise you will find crooks and morons at every corner just like we do today. As per court all the government has to do is say 16th amendment. The Federal Government's ability to tax income.
While I am not a lawyer, my guess is that taxing a specific company is somehow a violation of privacy laws, due process laws, etc. I think this may exactly be why a lot of Congressmen and Congresswomen voted for the motion. It allows them to grandstand for the folks back home, and say "See? I'm not part of the lobbyist connection in Washington. I'm representing you.", while going back to their donors on Wall Street and saying "Don't worry. This won't hold up anyways." I'm curious how Dodd will vote on this, now that its cleared the house. Will he vote against his own measure in the stimulus package? It also creates quite a slippery slope. Does this also give the Democrat controlled government the right to levy a 90% tax on the RNC? It's hard to say which group I resent more; the assclowns at AIG or the assclowns on Capitol Hill.
The government required 10 banks to take the TARP money, they couldn't refuse. The firms decided to make the payouts. If you worked at a tarp firm that paid out in 2008 like merrill , you don't get taxed, its just 2009 payments. (do merrill finance charlie rangle?? AIG supplied $10 million for the Charles Rangel City college education center last year). Can we tax congressional vanity at 90%? At $250,000 you couldn't even qualify to be in these firms affluent investor programs! Way to kill NYC and suburban real estate markets for many years. Who's going to work tomorrow knowing that some pensioned govt official may suddenly decide that your years effort working on nothing to do with toxic assets is now worth half the market rate? Think I'm going to work for the government - half the hours, a pension, tax preferences, job security and no need to use my full brain power. When will congress spend time fixing the failures of the SEC?
You got it! It won't hold up in court. A retro-active change to the tax laws to tax a specific group at 90% wouldn't pass constitution muster as the supreme court would rule it "harsh and oppressive". What we're seeing now all a big show. The congressmen know it's unconstitutional. But they want to us to be impressed with how outraged they are (while they meanwhile make backroom deals for campaign contributors). And of course the American people watching the prime time TV news soak this stuff up. It's how politics is done. What's sad is that if the government REALLY wanted to block the bonuses, there ARE ways it could be done LEGALLY. First, since AIG gave the government advanced notice about the bonuses, a law could have been passed to block them before they were issued. Second, existing bankruptcy laws allow for recovery of "preferential payments"... we could let AIG go bankrupt... recover the bonuses and other payouts, avoid giving a Christmas present to the shareholders of AIG who encouraged AIG to take on the risky obligations, and still backup the underlying assets of AIG in order to prevent AIG's collapse from bankrupting other companies. But see, that wouldn't make for nearly as impressive a show, now would it. Who'd vote for a congressman who let companies go bankrupt (and some limited stocks fall) when they could instead vote for the congressman who passed a law to "punish greedy bonuses". And the show gets to go on and on once the supreme court shoots down the law as unconstitutional (violates equal protection & ex-post-facto provisions)... at which time they'll argue we need to vote for certain candidates in order to make sure the "right "justices get appointed to the courts. It's all about looking good for the voters, while doing good for the big campaign $ contributors (eg wallstreet). Oh... and if you thought it was just one party or the other using these tricks... no way. They're all doing it. And we eat it up. TV time!