In reaction to the levy on deposits proposed and rejected in Cyprus a Missouri Congressman has submitted a bill in the House that would prevent the Congress from taking such a step here:
The measure from Rep. Billy Long (R-Mo.) was inspired by the banking crisis in Cyprus, which sent shivers through the markets this week when it considered assessing a levy against all bank deposits to help pay for a bailout of its major banks.
On Tuesday, Cyprus’ parliament rejected the idea of taking money from depositors, which some say could result in a quicker collapse of its banks.
Long said Wednesday that his resolution, H.Res. 129, was introduced to ensure the United States never considers a levy on deposits.
“The government should not tax people’s private savings accounts, which they have already paid taxes on, especially for the purpose of funding more bailouts,” Long said. “I was shocked by the news that some countries might be considering these kinds of taxes, and I think Congress should say that this kind of tax won’t happen in America.”
In my view this is solely a bit of political posturing, a useless and unnecessary waste of time. That, unfortunately, makes it very consistent with much of what the Congress does.
Let’s assume, just for the sake of argument, that the Congress is bound by the Constitution. I realize that’s a stretch. The Congress’s powers of direct taxation are actually quite limited under the Constitution, in Article I, Section 9:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
amended by the Sixteenth Amendment:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The Congress may also levy customs duties, excise taxes, and fees. Customs duties refer to imported goods. Excise taxes are collected at the time of sale as are fees, as when you purchase a stamp at the Post Office. Taxes on bank deposits don’t fit comfortably under any of those categories. I also think that such a tax would run afoul of the “Takings Clause” of the Fifth Amendment:
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
If, on the other hand, you hold to the view that the only limitation on the powers of the Congress are those of the imagination, the Congress could do anything it cared to, not only including a graduated levy on bank deposits but also ignoring prior laws against such actions. In either case the law would be meaningless.