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Is the Bonus Tax Unconstitutional?

Richard Epstein 26 March 2009 One Comment

Bills now winding their way through Congress would tax between 70% and 90% of bonuses paid to any executive earning in excess of $250,000, if he or she is employed by a business that received more than $5 billion from U.S. bailout funds. With popular outcry at a fever pitch, too few Democrats and only some Republicans are prepared to stand up to this juggernaut.

But would the courts uphold this legislation? The AIG bonuses were made pursuant to valid contracts entered into before the receipt of the bailout money. They were ratified in the legislation that provided for the bailout, and efforts to find loopholes in these contracts have proved unavailing.

Read more from Richard Epstein in the Wall Street Journal

One Comment »

  • Dan Kelley said:

    Barney Frank (D-Ma) is apparently ignoring the constitutional provision which forbids ex post facto legislation.

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