HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General Richard Blumenthal says a tax on bonuses of more than $1 million given by banks that received federal bailout funds will hold up in court.
Blumenthal issued a formal opinion Tuesday in response to a request by state Sens. Donald Williams and Martin Looney. He said a judge would likely find a proposed tax pending in the Legislature to be a constitutional exercise of the state's taxing power.
"This area of law is not often litigated and a court's final determination will depend on the circumstances surrounding the enactment," Blumenthal said.
"If the circumstances surrounding passage show that the proposed legislation furthers a legitimate, nonpunitive legislative goal, the proposed legislation is likely to survive constitutional scrutiny."
Blumenthal also wrote that a court would not likely view the proposed tax as "so punitive in purpose and effect as to deem it a criminal punishment."
The legislation would add another 2.97 percent tax on the bonuses on top of the state's income tax.
"The legislative purpose of the proposed tax is to raise revenues that will assist small businesses and promote job growth in these difficult economic times - - a legitimate and reasonable state objective," Blumenthal wrote.
"The relatively low level of the TARP tax will accomplish that purpose in a nonpunitive manner."
Blumenthal is currently running for U.S. Senate.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.