Wednesday, March 18, 2009

The Law, Perverted

One of the most important features of a just society is that the law must apply to everyone, equally. That is the true meaning of the often used, but often misinterpreted phrase, "rule of law."

A just law cannot apply to some people and not others. For example, Senator Max Baucus, Finance Committee Chairman, has proposed a special tax on the bonuses paid to AIG executives. This proposal is clearly unjust because it targets a small group of people. It is an example of what Bastiat called the perversion of law, when the law becomes an instrument of plunder.

While the Senator's position may strike a populist note, it also sets a dangerous precedent. Why not tax the wealth and income of other, politically unpopular groups? Because being politically unpopular is not a crime. It is, all too often, justification for the persecution of the innocent. 

Contrast the proposal of Senator Baucus with the position of the IRS on the deductibility of investment losses for victims of Bernie Madoff. The IRS says these guidelines will apply to all victims of Ponzi schemes, not just the people who lost money with Madoff.

Apparently, somebody at the IRS has more respect for the rule of law than does the Chairman of the Senate Finance Committee. 

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