Academic

Taxing the AIG Bonuses: A "bare congressional desire to harm a politically unpopular group"?

By Calvin Massey

   The House has passed a bill to impose a 90% tax on AIG bonuses.  Of course, it's couched in more neutral terms, but that is its purpose and effect.  Back in 1971, Congress enacted a bill to deprive hippies and hippie communes of food stamps.  Of course, it was couched in more neutral terms, but that was its purpose and effect.  That gambit, said the Court in USDA v. Moreno, violated the equal protection guarantee.  If equal protection means anything, said the Court, "it must at the very least mean that a bare congressional desire to harm a  politically unpopular group cannot constitute a legitimate governmental interest."  So what's the legitimate governmental interest in imposing a tax of 90%, a rate selected because one congressman (I think it was Charlie Rangel) noted that state and local taxes would take care of the other 10%?  To say that the legitimate interest is to recoup government funds used to make "inappropriate" compensation payments is just a gentler way of saying that we want to burn them at the financial stake.  Evidence of this can be found in the fact that just a few months ago Congress specifically permitted these very same bonuses, but now -- when the mob is howling for the guillotine -- Congress is suddenly concerned about the propriety of the fisc.  The level of popular and official venom is so high on this matter that it dwarfs the evidence of "a bare desire to harm" that animated the Court's conclusions in Moreno or Romer v. Evans.  This legislation, if finally enacted, should be struck down forthwith. 

     Lest any reader think I have some reason to apologize for AIG, I lost a lot of money on my AIG stock.  

Full post as published by The Faculty Lounge on March 20, 2009 (boomark / email).