Lawrence J. Kramer

Not the Tax Clawback I Had in Mind

Chris Butler has it exactly right. There is no such thing as a good "tax" clawback, because a clawback isn't a tax; it's a forfeiture. The Congress can tax income retroactively, and it can impose excise taxes on behavior it wishes to deter. But it cannot impose excise taxes retroactively. And a special, confiscatory tax on a particular kind of income received by a particular kind of person - "When they came for the AIGers, I said nothing, because I was not an AIGer" - is a tyrant's ploy. Fortunately, the Founding Fathers had words for that sort of thing, words like "attainder" and "ex post facto."

TARP Surtax Bill Could Create Millionaires

I think there's a decent chance this bill does not become law. The real reason is that it's unconsitutional and bad policy, but neither of those reasons are politically acceptable to the torch and pitchfork crowd, so some other pretext for scuttling the bill will have to be found.

It's all theater anyway, as the courts won't let the IRS collect a retroactive, confiscatory excise tax. Well, maybe not ALL theatre: the courts may strike down only the retroactive part, leaving the bad policy in place to tie the hands of managers going forward.