Richard Epstein in today’s WSJ:
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.
Thus any sensible system of limited government should consider the proposed bills unconstitutional. Special taxes on some forms of income (but not others) and retroactive taxes put in place after business transactions are complete both merit strong condemnation. The bills in Congress are rife with both elements.
Nevertheless, a constitutional attack against any such law that might emerge faces an uphill battle.
Epstein’s bottom line: Courts are too deferential to Congress, particularly in the context of taxes and economic regulation.