Congress Invites Court Challenge With AIG Taxation Plan

You can’t do this, Congress. It’s against the Constitution to levy taxes against a select group of people.
Sorry. You Dems goofed up…now you have to eat the crow.

Lawmakers outraged over the AIG bonuses have told the people who got the money to watch out — the government will get it back one way or the other, even if it means taxing the heck out of their paychecks.

But legal scholars say Congress will have a tough time defending itself in court if it goes down that road.

Not only would Congress be retroactively meddling with contractual agreements, they say, but it would be passing laws that would essentially target a specific group of employees.

Jonathan Turley, George Washington University law professor, said targeting those employees through taxes would invite a valid court challenge.

“It could well trigger years of litigation,” he said. “Just because a company or individual is unpopular does not mean the government can retroactively impose punitive measures against them. … There’s a host of difficult contractual and constitutional and statutory barriers that would have to be overcome by Congress.”

Two of those difficulties, lawyers say, lie in Article I of the U.S. Constitution — a section stating Congress cannot pass any “Bill of Attainder” or “ex post facto” law.

A Bill of Attainder is an act of the legislature that singles out and punishes a group or individual without trial. An ex post facto law retroactively changes the legal consequences of an act.

“It’s a Bill of Attainder. It can’t be done,” Sen. Judd Gregg, R-N.H., told FOX News when asked about proposals in the Senate to tax AIG.

President Obama even warned Wednesday about the possibility of a costly court battle over the $165 million in bonuses.

“We are exploring every possible avenue, as is Congress, to see what we can do. But what we need are tools that allow us not to find ourselves in a situation where we only have two options,” Obama said. “One is to withhold money from AIG that could potentially lead them into a spiral that could affect the entire financial system. Or, on the other hand, having folks get bonuses and at least have the capacity to sue the government and get not only their bonuses but potentially even more out of the legal system.”

Treasury Secretary Timothy Geithner wants to require AIG to pay back the money to the government and deduct that amount from the $30 billion bailout commitment, as well as subject future bonuses to tough restrictions.

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