Business

House Passes Measure to Tax Bonuses

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Given all the press the AIG bonuses have garnered, you’d think our only economic problem was a few nearsighted/greedy execs at one insurance firm. Today, the House took AIG backlash to the next level by passing a bill which would levy heavy taxes on such bonuses. Specifically:

The bill would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.

Leaving aside whether or not his is an appropriate or necessary move, the whole situation has hit the farcical stage. Our Congress hands out billions of dollars with too few strings attached and then acts shocked — shocked! — when the money is misused. Their solution, of course, is to act punitively in a show of staged populism.

All this while many larger problems go unaddressed or ignored.

While I’d like to think this fiasco will once-and-for-all stop the kind of chicken-little attitude that allows poor bills to become law, I doubt that’s the lesson everyone will take away. In fact, I have a feeling many in Congress feel the bill passed today proves they are doing their job. Except, their job was getting the legislation right the first time.

  • ExiledIndependent

    Ridiculous populist political theater intended to assuage Americans’ anger over how the government has handled this and to distract from the government’s own role in the process. By the way, who is the mysterious person from the Treasury dept. who leaned on Dodd to include the bonus protection in the stimulus bill? Is anyone even interested in finding out? And, by the way, has anyone bothered to look at who’s campaign coffers AIG has been filling?

    I’m about to hurl.

  • kranky kritter

    I wholeheartedly agree that it would be nice if such episodes taught congressfolk not to legislate hastily.

    However, you gotta admit that congress’s apparently almost unlimited power of mulligan does make it a largely moot point. Bills like this are sort of like MS Bloatware…you release a beta version, you let the poor users find the flaws, then you do some patches. So much easier than getting it right the first time.

  • Trescml

    Although I wish that Congress used foresight instead of hindsight, they did show self preservation. I think the bigger implication of the populist uprising is that no more bailout money is going to get through Congress until after midterm elections (if then). Maybe that is a good thing, but AIG biting the hand that owns it is going to tie the hands of the Obama adminstration or cause them to be far more creative (like the trillion bucks that just got poured into the economy). The risk is the creative moves may cause unintended or bad consequences.

  • http://del'sperspective.blogspot.com Del Patterson

    First, let’s make sure that we all understand that the bonuses were promised months ago. Second, both the Fed and the Treasury Dept signed off on the bonuses and knew full well that payment was part of contractual law and not something that was capricious.
    Angry, hell yes, put this country was based on the rule of law and not on flippant “let’s-go-get-them-and-shut-them-down”.

  • gerryf

    Not sure how to respond to this whole thing….Alan, are you saying we should be mad that congress corrected a mistake?

    I do agree that this has clouded the much larger issue, but that doesn’t mean we should ignore the greedy excess (or frankly casual indfference) of AIG execs.

    How about we do both–correct the bonus issue AND step our efforts in review and oversight. I am not going to lose one bit of sleep over the populist uprising….