CNN: House OKs bill taxing bailed-out firms' bonuses.

[Parks]

Posted: 3/19/09 at 5:57pm

90%??

[Gothampc]

Posted: 3/19/09 at 7:23pm

Riiiiiiiiip goes The Constitution.

[Craig]

Posted: 3/19/09 at 8:50pm

Oh please. What specific part of the constitution was broken?

[Gothampc]

Posted: 3/19/09 at 9:15pm

"Oh please. What specific part of the constitution was broken?"

Why don't you read it once in awhile.

Article 1 Section 9

Section 9 - Limits on Congress

No Bill of Attainder or ex post facto Law shall be passed.

A Bill of Attainder is an act of the legislature that singles out and punishes a group or individual without trial. An ex post facto law retroactively changes the legal consequences of an act.


Read It

Updated On: 3/19/09 at 09:15 PM

[Craig]

Posted: 3/19/09 at 9:31pm

and yet (if you also read other sections, you might find)

Amendment 16 - Status of Income Tax Clarified. Ratified 2/3/1913.

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

[JustAGuy]

Posted: 3/19/09 at 9:35pm

"A Bill of Attainder is an act of the legislature that singles out and punishes a group or individual without trial."

Just out of curiosity...are taxes considered a punishment?

[YouWantitWhen????]

Posted: 3/19/09 at 9:40pm

Actually, Lawrence Tribe (he wrote a couple of legal text books, and is a con law scholar) wrote his first impression assessment on the possibility. He said a law could be crafted that was constitutional.

"All things considered, I believe it very likely that Congress could design a fully constitutional means of clawing back into the federal treasury all amounts paid (or to be paid in the future) in the form of retention bonuses from federal funds disbursed either by the Federal Reserve Board pursuant to legislative authorization tracing to the 1930s or by the Treasury pursuant to the most recently enacted federal bailout and stimulus measures."

I personally think it is bad public policy to use the tax code to make up for mistakes, but that is just me.
Tribe

[Tom's Cat]

Posted: 3/19/09 at 9:54pm

It scares me that congress is using this authority to counteract legal contracts. As was mentioned in one editorial - this is America folks - not the ol' Soviet Union. We don't ignore or play a fast shuffle around LEGAL contracts that we don't happen to agree with.

While the mere fact of the bonuses angered me as much as anyone else, the truth behind them made me (grudgingly) accept the need. The people who were responsible for the avaricious deeds that brought AIG down are long gone. They didn't get a penny of these bonuses. These were awarded to the lower echelon of people who had no say in the company's policies but who had the technical know-how to fix the monstrous mess the execs left behind. In order to keep those people there and doing this thankless work, they were promised bonuses. Maybe the bonuses were too high and they DEFINITELY shouldn't have been called "BONUS", but they are understandable.

Updated On: 3/20/09 at 09:54 PM

[madbrian]

Posted: 3/19/09 at 9:59pm

"Just out of curiosity...are taxes considered a punishment?"

In this case, they are. I want this thread to be deleted because Goth is right.

[Craig]

Posted: 3/19/09 at 10:05pm

Well - while I tend to agree with you Tom's Cat - and if the bonuses were paid with 100 percent of their money without government assistance - I would say this move it criminal.

However - if anyone lends/gives someone money - they do have the right to set down ground rules and if you don't like the rules, you don't need to take the loan/gift.

The government, I believe, is trying to make sure that the money they are loaning/giving is 100 percent put towards the use it was intended. Sort of like how wills can and often have stipulations on how/when money is dispersed.

[papalovesmambo]

Posted: 3/19/09 at 10:11pm

but craig, they had the chance to set rules and they specifically told them that they could give out the bonuses. aig waited until the friday before to give them out because they were waiting for the ok from the treasury - which they got!!! so we give them the money, say it's to pay the bonuses in general if they were contracted before 2/11/09, and in your case specifically aig, it's ok, and then when they news comes out we say, "whoa, whoa, whoa! we're gonna take that money back because you did what we told you it was ok to do!" not only is that wrong, but it makes the entire administration look like the either don't know what they are doing or they are in aig's pocket.

[madbrian]

Posted: 3/19/09 at 10:15pm

"However - if anyone lends/gives someone money - they do have the right to set down ground rules and if you don't like the rules, you don't need to take the loan/gift."

I agree, but this tax was not part of the deal that was agreed to. Bottom line is that these are valid contracts, and if the government didn't want the bonuses paid, then the bailout shouldn't have been made. They could negotiate limits on future contracts, but they can't force people to renegotiate existing deals.

[madbrian]

Posted: 3/20/09 at 8:39am

The link below makes a pretty good argument for how dumb this is:

http://www.fivethirtyeight.com/2009/03/tax-banks-not-bankers.html

[papalovesmambo]

Posted: 3/20/09 at 8:42am

when you've lost tpm...

[madbrian]

Posted: 3/20/09 at 9:38am

For those who don't want to be bothered with the details in the links, here's my understanding of the bill:

If you are an employee of any company that received TARP/bailout money (that inlcudes AIG and other banks/financials, auto companies, etc.) and your HOUSEHOLD income is over $250k, then any bonus you receive will be taxed at 90%. What started as an attempt to recoup extravagant bonuses from wealthy execs will now impact a much broader audience, including engineers, line managers, etc. who happen to be married to high earners. This is a truly bad idea that will probably fly through Congress and be signed by the President.

[papalovesmambo]

Posted: 3/20/09 at 9:57am

but mb, congress simply has to do something! those dreadful rich folks are getting away with murder! murder i tell you!!! we can only hope the senate fulfills its duty to act as the adult in the room. hey, i managed to type that with a straight face, too!

[madbrian]

Posted: 3/20/09 at 10:05am

Well, for what it's worth, I went to the whitehouse.gov website and sent a comment stating my opinion that this was a truly stupid idea. Obama ran on telling people that he was ready to make difficult, unpopular decisions, and talk frankly to people. This would be a wonderful opportunity for him to live up to that.

[papalovesmambo]

Posted: 3/20/09 at 10:51am

he also ran on getting rid of earmarks, having legislation available to be reviewed by the public for five days before it was voted on, post-partisanship, recognizing the genocide in armenia, not hiring anyone who was a lobbyist...etc.

i envy you your optimism, mb.

[Craig]

Posted: 3/20/09 at 10:54am

It's going to be an interesting 4 years. I'll leave it lie at that. My firm belief is and has been the last 8 years that a) anyone is "better" than Bush was - especially his 2nd term and b) whoever took over as president would have one hell of a time making progress to undo or move forward after the past 8 years. There's no magic bullet.

"we shall see"

Updated On: 3/20/09 at 10:54 AM

[YouWantitWhen????]

Posted: 3/20/09 at 10:59am

We are talking about Congress here. Hopefully the Senate will have a bit more thoughtful consideration, and not pass anything like this.

I would love to lose Pelosi and Reid as leadership of the respective houses to more thoughtful and dynamic democrats.

This is a bad idea. Especially using reference to "households."

Bad law gets made when people are rushing to try and prove they are actually doing something.

[papalovesmambo]

Posted: 3/20/09 at 11:44am

craig, it is so like you to want to shoot the magi! sick!

[madbrian]

Posted: 3/20/09 at 2:26pm

Seems like there is another bill on its way that will ban any type of bonus payment to any employee of any recipient of TARP/bailout money. Another bad idea. These companies need to be able to keep good employees, and I'm not talking about credit swap managers, I'm talking about engineers, underwriters, operational managers, etc. Since we've sunk all this money into these companies, don't we now want them to succeed? Looks like Congress is hellbent on hamstringing them to the point that they are more likely to fail.

http://www.huffingtonpost.com/2009/03/20/new-bill-would-ban-all-ba_n_177348.html

[papalovesmambo]

Posted: 3/20/09 at 2:28pm

even krugman thinks its bad policy!

[Roscoe]

Posted: 3/20/09 at 3:18pm

Yeah, but in way too many cases, the bonuses are going to the people who brought their companies to the brink of bankruptcy, aren't they? Why would they want to retain these people?

[madbrian]

Posted: 3/20/09 at 3:30pm

"Yeah, but in way too many cases, the bonuses are going to the people who brought their companies to the brink of bankruptcy, aren't they?"

The ones that are getting attention in the press are. However, the way the bill is written, the impact will be very broad. It could impact mid-level managers, engineers, underwriters, systems folks, etc.