Thursday, March 26, 2009
The March 25, 2009 National Law Journal has a story about the AIG bonuses which is basically just an interview of attorney Carolyn Plump. Plump basically argues that the bonuses are legally binding contractual obligations and any effort to tax them is punitive.
Plump is of course correct. Additionally, the federal stimulus legislation specifically states that it does not apply to previously written employment contracts. Moreover, any attempt to take away compensation may run afoul of New York Labor Law.
The issue of a punitive ex post facto tax is a different story. I am less concerned with its ex post facto nature as no crime is involved. I am just not sure whether the IRS is prohibited from punitive taxation. I am also not sure if this is punitive. Rather, it is reflection of betrayal because AIG has been given millions in bailout money.
Mitchell H. Rubinstein