A Chilling Harbinger: Confiscation as Taxation

Congress' lopsided vote on Thursday to tax AIG executives' bonuses at no less than 90%, and to apply the same to other bailout recipients, undermines Constitutional and contract law and is a clear abuse of power.  Americans who applaud this act may want to think twice.  If Congress is willing to break the law to confiscate these executives' bonuses, what will stop it from extending legislation to those who receive no government bailout money?

You may say that's absurd.  This is a special case.  Congress is merely recovering taxpayer money from ill-managed and profligate enterprises.  But Charles Krauthammer writes:

"[T]here is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress will summarily cancel contracts?

"Even worse are the clever schemes being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution."

Consider this: What have we witnessed over the past one hundred years, the advance or retreat of the national government?  The national government has grown beyond anything the Founders envisioned.  Its tentacles stretch into virtually every facet of our lives.  Its heavy hand is felt on businesses, big and small.  It dictates to automakers mileage standards.  It meddles in doctor-patient relationships.  It even decides what our children will or won't eat in local public school cafeterias.  Among other innumerable activities.   

And then there's the federal tax code.  The federal income tax began in earnest with the passage of the 16th Amendment in 1913. The tax was modest; the code, simple. 

Ninety-six years later, the tax code has grown into a leviathan.  It is rich with laws and rules that are contradictory or vague.  It is manipulated by Washington politicians to reward or punish interest groups and various constituencies.  It can -- and is -- used as a club not just against tax cheats, but innocent taxpayers.  No one can figure out the code, not you or your accountant. Or, he claims, the Secretary of the Treasury.

So why do you think that the legislation passed by Congress on Thursday is a special case and not a precedent?  Why isn't it the first slip on a slippery slope?

Perhaps as the economy worsens, Congress will next train its sights on government contractors.  With widespread economic distress, why should executives at solvent enterprises doing business with the national government collect obscenely large salaries and bonuses?

And then what about the vendors who provide services, products and materials to government contractors?  Aren't they benefiting, albeit indirectly, from taxpayer largesse?  Why shouldn't Congress make a special case out of them as well? 

With the president and Congress piling debt upon debt; creating deficits in the unimaginable trillions; pushing to create new, broad, expensive and, ultimately, permanent spending programs; and, at some point, having reached the upper limit of soaking the "rich;" might it not be time for any executive at any business to do his or her patriotic duty and turnover even more generous portions of their incomes and bonuses to the government? 

But if they're not willing to step up and do their patriotic duty, as Vice President Biden may suggest they do, might it not be altogether appropriate for Congress, backed by the full-throated outrage of fearful and vengeful citizens, to make them special cases as well?  After all, isn't patriotism about sacrifice and sharing pain?  Certainly, a posturing president and a blustering majority in Congress say so. 

For those who say that the logic here is stretched or tortured, the response is simple: Why do you think that Washington politicians are governed by logic or sensibility?  Much less fairness or right?  As the Founders might comment from their heavenly perches, politicians are inflamed by passions, full of self-interest and mean in virtues.  They are as flawed as any of us, with the caveat that they have the power to overreach and abridge our rights.  The last one hundred years of national government history bolster the argument.  It is the Constitution that has been stretched and tortured.      

So, beware of congresses that pass "small-bore" legislation.  Be careful when they proclaim that such legislation serves limited purposes and doesn't pertain to you.  Bar your doors and watch your wallets.  And consider what the Joker asked Vick Vale rhetorically in the first Batman movie: "Have you ever danced with the devil in the pale moonlight?"
Congress' lopsided vote on Thursday to tax AIG executives' bonuses at no less than 90%, and to apply the same to other bailout recipients, undermines Constitutional and contract law and is a clear abuse of power.  Americans who applaud this act may want to think twice.  If Congress is willing to break the law to confiscate these executives' bonuses, what will stop it from extending legislation to those who receive no government bailout money?

You may say that's absurd.  This is a special case.  Congress is merely recovering taxpayer money from ill-managed and profligate enterprises.  But Charles Krauthammer writes:

"[T]here is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress will summarily cancel contracts?

"Even worse are the clever schemes being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution."

Consider this: What have we witnessed over the past one hundred years, the advance or retreat of the national government?  The national government has grown beyond anything the Founders envisioned.  Its tentacles stretch into virtually every facet of our lives.  Its heavy hand is felt on businesses, big and small.  It dictates to automakers mileage standards.  It meddles in doctor-patient relationships.  It even decides what our children will or won't eat in local public school cafeterias.  Among other innumerable activities.   

And then there's the federal tax code.  The federal income tax began in earnest with the passage of the 16th Amendment in 1913. The tax was modest; the code, simple. 

Ninety-six years later, the tax code has grown into a leviathan.  It is rich with laws and rules that are contradictory or vague.  It is manipulated by Washington politicians to reward or punish interest groups and various constituencies.  It can -- and is -- used as a club not just against tax cheats, but innocent taxpayers.  No one can figure out the code, not you or your accountant. Or, he claims, the Secretary of the Treasury.

So why do you think that the legislation passed by Congress on Thursday is a special case and not a precedent?  Why isn't it the first slip on a slippery slope?

Perhaps as the economy worsens, Congress will next train its sights on government contractors.  With widespread economic distress, why should executives at solvent enterprises doing business with the national government collect obscenely large salaries and bonuses?

And then what about the vendors who provide services, products and materials to government contractors?  Aren't they benefiting, albeit indirectly, from taxpayer largesse?  Why shouldn't Congress make a special case out of them as well? 

With the president and Congress piling debt upon debt; creating deficits in the unimaginable trillions; pushing to create new, broad, expensive and, ultimately, permanent spending programs; and, at some point, having reached the upper limit of soaking the "rich;" might it not be time for any executive at any business to do his or her patriotic duty and turnover even more generous portions of their incomes and bonuses to the government? 

But if they're not willing to step up and do their patriotic duty, as Vice President Biden may suggest they do, might it not be altogether appropriate for Congress, backed by the full-throated outrage of fearful and vengeful citizens, to make them special cases as well?  After all, isn't patriotism about sacrifice and sharing pain?  Certainly, a posturing president and a blustering majority in Congress say so. 

For those who say that the logic here is stretched or tortured, the response is simple: Why do you think that Washington politicians are governed by logic or sensibility?  Much less fairness or right?  As the Founders might comment from their heavenly perches, politicians are inflamed by passions, full of self-interest and mean in virtues.  They are as flawed as any of us, with the caveat that they have the power to overreach and abridge our rights.  The last one hundred years of national government history bolster the argument.  It is the Constitution that has been stretched and tortured.      

So, beware of congresses that pass "small-bore" legislation.  Be careful when they proclaim that such legislation serves limited purposes and doesn't pertain to you.  Bar your doors and watch your wallets.  And consider what the Joker asked Vick Vale rhetorically in the first Batman movie: "Have you ever danced with the devil in the pale moonlight?"