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House Democrats pass punitive tax on AIG bonuses

Well, they did it; from Yahoo! News:

Acting swiftly, the Democratic-led House approved a bill Thursday to slap punishing taxes on big employee bonuses at firms bailed out by taxpayers. In some cases the bonuses might be taxed 100 percent leaving the recipients with nothing.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money.

"We want our money back now for the taxpayers," House Speaker Nancy Pelosi said.

Rep. Charles Rangel, a New York Democrat, chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses, nullifying the payouts.

[...]

The vote to tax back most of the bonuses was 328-93. Voting "yes" were 243 Democrats and 85 Republicans. It was opposed by six Democrats and 87 Republicans. (emphasis added)

A big "thanks for nothing" to the 85 House Republicans who either don't understand how dangerous this bill is, or who are too scared to oppose the mob mentality of the House leadership.

I rarely look forward to lawsuits, but if either the House or Senate version of the "AIG tax" makes it out of Congress and is signed into law by the President, then our government deserves to be taken to court. The Yahoo! News article attempts to justify the "AIG tax" by quoting a tax expert who cites the federal excise taxes applicable to greenmail payments as an example of narrowly-focused taxes that are perfectly legal and have been vetted by the courts.

Problem is, as Steve Priestap pointed out in an earlier post, "bills of attainder" are unconstitutional. Unlike greenmail excise taxes, the "AIG tax" is not designed to discourage behavior that is considered unethical by business owners. And as we have seen, the AIG contract bonuses have been discussed openly for weeks by AIG, members of Congress, and the Treasury Department. There was nothing unethical, criminal, or secretive about them.

I can't imagine a Federal court upholding a bill that levies punitive Federal taxes on contract bonuses when Congress specifically included contract bonus protection in a bill signed into law barely a month earlier. Then again, I'm not a part of the government.


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Comments (28)

To recap... Our Parliament ... (Below threshold)

To recap... Our Parliament of Whores committed an act of supreme legislative malpractice by passing a Bill that no one had time read, much less digest or debate, and now they're compounding that mistake by passing what amounts to an unconstitutional Bill of Attainder to cover their tracks.

Lovely, just lovely... Damn the Constitution, full speed ahead!

Good Lord!Have any... (Below threshold)

Good Lord!

Have any of these clowns ever even read the US Constitution?

Have they ever heard of ex-post facto laws?

Obviously not.

I swear to you, my dog and cat could do a better job than this Carnival of the Clueless.

Sadly, my own GOP squish Co... (Below threshold)
RB:

Sadly, my own GOP squish Congresscritter--TODD PLATTS--was one of the yea votes.

Hey Nancy! NEXT TIME READ ... (Below threshold)
GarandFan:

Hey Nancy! NEXT TIME READ THE FUCKING BILL BEFORE YOU PASS IT!S Ya dumb bitch!

Once again this shows how l... (Below threshold)
Matt:

Once again this shows how little congress really knows about the laws they pass and insist we follow.

It might be different for AIG bonuses, but everytime I have received a bonus, it was taxed at around the rate of 44%, fed and state combined. The taxes came out of the bonus before it was given to me, not at the end of the tax year. This bonus tax has also come out of excess leave sold back, severance pay etc. I would imagine that if bonus taxes aren't a fixe rate that it would of gone up as the size of the bonus goes up.

Bottom line, I am pretty sure these AIG bonuses have already been taxed by the feds and appropriate states. If that is the case, I can't see how they could tax it again.

I rarely look forw... (Below threshold)
marc:
I rarely look forward to lawsuits, but if either the House or Senate version of the "AIG tax" makes it out of Congress and is signed into law by the President, then our government deserves to be taken to court.
Hear... hear!

Bring on the army of lawsuits. Head the list of charges be Conspiracy to Defraud, with obama and tax cheat Geithner as the charged parties along with the rest of the congress critters.

Problem is, as Steve Pri... (Below threshold)
Brian:

Problem is, as Steve Priestap pointed out in an earlier post, "bills of attainder" are unconstitutional.

Problem is, it's not a bill of attainder.

Have any of these clowns... (Below threshold)
Brian:

Have any of these clowns ever even read the US Constitution?
Have they ever heard of ex-post facto laws?
Obviously not.

Are you aware that ex post facto applies only to criminal laws, not civil? Obviously not.

Hell, even Steve Priestap's post that Michael linked to says that! I think your dog and cat could also do a better job reading than you did.

Wayyyyyyy down at the very ... (Below threshold)

Wayyyyyyy down at the very end of this WSJ article is this little gem:

"Democrats say the bill is not specifically aimed at AIG but is intended to prevent further abuses by bailout companies."

Cute.

OK, let's say every AIG emp... (Below threshold)

OK, let's say every AIG employee has to payback every last penny of their bonus, who here really thinks that you'll see dime one of that returned to you.

Anybody? Hello, anybody?

Cue the crickets and tumbleweeds sound effect.

Problem is, it's n... (Below threshold)
Problem is, it's not a bill of attainder.

So says Laurence Tribe, I suspect you'll find a number of Constitutional Scholars who will disagree with him.

I suspect you'll find a ... (Below threshold)
Brian:

I suspect you'll find a number of Constitutional Scholars who will disagree with him.

Most assuredly. If all lawyers agreed, we wouldn't need judges.

If you find any of these Constitutional Scholars who disagree, feel free to post links to their arguments.

i would think anyone who re... (Below threshold)
ke_future:

i would think anyone who received the bonus, and then has it taken away via taxes has a good shot at a de facto breach of contract suit given that the US gov't now owns what, 40% of AIG? and those suits would ay double or triple in damages.

and that doesn't even address any possible constitutional issues.

I'm sure investment in the ... (Below threshold)
joh:

I'm sure investment in the US will skyrocket now that congress has shown it's willing, when politically convenient, to pass this type of legislation.

Did the Dumbkopfs in the C... (Below threshold)
Stan25:

Did the Dumbkopfs in the Congress stop to consider that some of these people that received theses bonuses are not even American citizens, but are legal residents of other countries and hence are not subject to our tax laws? Hell no!!!! They were in a major CYA mode and to hell with the fine details that cover this. I would not be too surprised if some of the other countries' ambassadors make a call to the Congresscritters that voted for this ex post facto and bill of attainer law and give them what for.

Did the Dumbkopfs in the... (Below threshold)
Brian:

Did the Dumbkopfs in the Congress stop to consider that some of these people that received theses bonuses are not even American citizens, but are legal residents of other countries and hence are not subject to our tax laws?

Of course. So? A tax is only valid when it impacts everyone? That's a new one. Those "Dumbkopfs" seem to know tax law better than you.

Will this impact the bonuse... (Below threshold)
ODA315:

Will this impact the bonuses just paid to the Fannie Mae execs????

Hey Brian, shouldn't we go ... (Below threshold)
ODA315:

Hey Brian, shouldn't we go back and get Frank Raines' bonuses? Hell, they were even granted after he cooked the books..... Wadda ya think? I know you libs are all into fairness so let's get 'er dun.

And now we've got Geitner, Dodd, and others lying about the bill and stripping out/adding in the bonus exclusion language. I'd like to know what the president and his "men" knew and when they knew it. Seems like alot 'o lyin' goin' on here Lucy. We know Dodd lied and received 100k + in campaign cash from AIG. Our honest and hardworking Prez also received a bunch of money and appears to have stretched the truth about what he knew.....

Are you aware that... (Below threshold)
the monster:
Are you aware that ex post facto applies only to criminal laws, not civil?
No, that's not true. The Constitution makes no such distinction.

As for ex post facto intruding into civil law, ever hear of nulla poena sine legi?
Are you aware that ex po... (Below threshold)
John Irving:

Are you aware that ex post facto applies only to criminal laws, not civil?

Cool, so the AIG employees can just refuse to pay the new tax. Wait. . .

This will wind up in court, and Congress and the administration will lose. And it will cost even more of our tax dollars than if they had done nothing.

No, that's not true. The... (Below threshold)
Brian:

No, that's not true. The Constitution makes no such distinction.

Yes, it effectively is. The Constitution doesn't need to.

Since at least the early part of the 1800s, though, the ex post facto clauses have been interpreted as applying to criminal laws only.

Even Ms. Kim-Of-Wizbang-Married-To-The-Lawyer-Who-Knows says so.

ever hear of nulla poena sine legi?

You mean "nulla poena sine lege"? Yes. That's why Congress passed the law. Which makes your question non gradus anus rodentum.

Brian, are you being delibe... (Below threshold)
bobdog:

Brian, are you being deliberately obnoxious or are you merely stupid? You seem to go out of your way to offend as many people as possible.

"And it will cost even more... (Below threshold)
SillyPuddy:

"And it will cost even more of our tax dollars than if they had done nothing."
---

That's for sure.

Brian, are you being del... (Below threshold)
Brian:

Brian, are you being deliberately obnoxious or are you merely stupid?

It's unfortunate you feel that facts and the law are obnoxious and stupid.

The people who got the 165 ... (Below threshold)
Mac Lorry:

The people who got the 165 million in bonuses are the ones managing a 1.6 TRILLION dollar portfolio containing an estimated 200 BILLION linked to subprime backed securities. When the retention contracts were signed last year it was deemed prudent to retain the most experienced and skilled people to wind down that portfolio. Since that time these individuals have successfully dropped the value of that portfolio from 2.4 trillion to the current 1.6 trillion. The contracts in the portfolio are all custom written and require management on a daily basis to prevent a cross linked meltdown that would either cost taxpayers up to 1.6 trillion or take down what's left of the functioning financial system.

To protect taxpayers and the economy from such a potential catastrophe Edward Liddy, was brought in by the Federal government to be CEO of AIG for one dollar a year. Liddy, Geithner, and Bernanke all knew about the retention bonuses and determined it was in the best interest of taxpayers to retain the most experience and skilled individuals to wind down the portfolio. In effect, these individuals are being asked to do a good job of eliminating their own jobs, and thus, the necessity of the bonuses.

So here's the question. Why hire the supposedly smartest and most experience people such as Liddy, Geithner, and Bernanke and then disregard their best advice? What I want to know is who's going to take responsibility for the catastrophe when the 1.6 TRILLION dollar portfolio blows up? Ok, it's a given that democrats will blame Bush, but that's going to be a hard sell.

Even if people come to their senses and realize Liddy, Geithner, and Bernanke were right to pay the bonuses, it's too late to go back. The individuals who have the needed knowledge and skill to wind down the 1.6 trillion portfolio have been demonized, denigrated, and threatened with criminal prosecution by our lawmakers. Rumor is that most of them are giving the money back and resigning. Yes, Congress here's your 165 million back and BTW, here's this 1.6 trillion dollar monster that will eat the heart out of the economy if it's not skillfully kept in check on a daily basis. Good luck, you're going to need it.

During the congressional hearing on AIG this week there were a number of code pink ladies holding up signs which the committee chairman found threatening. Well if the 1.6 trillion dollar monster does get lose and eats the heart out of the economy lawmakers won't need to worry about little women in pink with signs, but about big men in black with nooses.

So we spent almost two hund... (Below threshold)
John Irving:

So we spent almost two hundred billion dollars on AIG to do what? Close it down as all their employees quit? Couldn't we have had the same effect from letting it go bankrupt, and not sent the money.

So we spent almost... (Below threshold)
Mac Lorry:
So we spent almost two hundred billion dollars on AIG to do what? Close it down as all their employees quit? Couldn't we have had the same effect from letting it go bankrupt, and not sent the money.

As Edward Liddy explained to the dunce congressmen questing him, the original cause of the entire finacial mess are subprime mortgages, most of which are already guaranteed by the government anyway. Even if we let AIG fail, the taxpayers would be on the hook for those mortgages. However, the linkage to these toxic assets is so complex and obscure that a failure at AIG would likely bring down much of the financial industry in a domino effect. Thanks to stupid lawmakers' overreaction to a puny 165 million we may be on the way to seeing if the domino effect is real.

Leave it to the demacreeps ... (Below threshold)
Flu-Bird:

Leave it to the demacreeps to lay another stupid tax on us all just typical of these scumballs




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