I think we pretty much agree AIG shouldn't have given the lavish bonuses and we may disagree on whether or not they should give all or none back, etc. BUT - The troubling thing to me is this 'Feined Outrage' bill that just passed yesterday. It places a specific tax on bonus money paid out by companies that were given bailout funds.
Hear me out. "
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. It would apply to any such bonuses issued since Dec. 31.". My beef is the following:
1) What about the poor family that has one member making $50k from a bailout recipient company and gets a measely $20k bonus. Lets say their spouse makes $200k. Under this scenario, they would have to pay a 90% tax on the $20k. What if they used that money to pay off credit cards or pay off a car loan? They no longer have that cash in hand. If they can't pay that money to the IRS ahead of time, when they file they will show a substantial lopsidedness in what they owe. When you owe over a certain amount in taxes, there are additional penalties and fees that quickly grow the amount of what you owe. So, the family above could end up owing $23k to the government next tax year instead of $18k.
Add to this the fact that the government now thinks its OK to selectively tax a group or individual. Which brings me to...
2) This whole thing will never see the light of day. It is unconstitutional. Bills of Attainder and retroactive laws (laws passed Ex Post Facto) are ILLEGAL. Add to this the contract clause (the bonuses were paid under a
contract) and the whole payback thing falls apart... Plus there are MANY AIG recipients that work outside the US and do not pay or file US taxes.