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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