bonuses

[James Maule]

FWIW, there is precedent of a sorts for the tax proposal. In both the areas of tax-exempt organizations and retirement plans, Congress has defined a variety of prohibited transactions in which the entity or those affiliated with it in some way must not engage as a condition of the exemption benefit. A 100% tax is imposed on the prohibited transaction under certain circumstances, subject to exceptions, etc etc. The bailout is no less a benefit than is the exemption, and an attack on the Sandy's suggested 100% tax ought fare no better than the attacks on the 100% prohibited transaction taxes (which is to say, they didn't fare well at all).

Jim Maule

-----Original Message-----
From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Sanford Levinson
Sent: Monday, March 16, 2009 2:26 PM
To: conlawprof at lists.ucla.edu
Subject: RE: bonuses

What prohibits Congress from passing a law saying either 

a) No contract between any bank or other entity receiving federal
bailout funds and any employees regarding the receipt of bonuses shall
be honored, save with the approval of the Secretary of the Treasury or

b) any bonus received after December 1, 2008, by any employee of any
bank or other entity receiving federal bailout funds as of that date
shall be taxed at the rate of 100%?

I presume that the bankers would cite Blaisdell (a state case, of
course) with regard to the first.  I believe that the contract clause
has been incorporated against the feds with regard to its own contracts,
but what about a class attempt to "impair the obligation of contracts"?
Even if one constructs (our of whole cloth?) an argument against federal
impairment of private contracts, what about the confiscatory taxation?
On what theory is that unconstitutional?  

sandy
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