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Friday, March 27, 2009

Bartlett: Republican Tax Travesty

Forbes: Republican Tax Travesty, by Bruce Bartlett:

On March 19, the House of Representatives voted to impose a 90% tax on the incomes of certain executives of financial institutions receiving federal funds. What was remarkable about this vote is that 85 Republicans voted for this travesty. The consequences will be felt for years to come.

The history of tax policy is that it tends to go in one direction until there is a key event that establishes a new direction. ...

The only reason for the tax increase was outrage, stoked by faux populist right-wing talk radio hosts, over bonuses paid to executives of AIG, the insurance company at the heart of the financial crisis. That the Democrats, who traditionally support soak-the-rich policies, reacted with righteous anger against some fat cats is no surprise. That 85 Republicans joined them is remarkable and possibly unprecedented.

Particularly dismaying is the fact that supporters of the tax increase included senior members of the Republican leadership. ...

The worsening of the government's budget deficit virtually ensures that higher taxes will be required in the not too distant future. When that day comes, Republicans will undoubtedly claim that anti-tax purity prevents them from supporting such action. However, in the case of 85 House members this won't be the case. We already know what they are; it's just a question of negotiating the price.

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Comments

That prissy guy that thinks he's going to be a senator from Illinois was on the list of Rs that wanted to steal the money from those families. Eric Cantor was one too. I used to like him. Have at him, NPR and MSNBC. Tear him to pieces and give him the Full Limbaugh. Fine with me.

Posted by: happyfeet | Mar 27, 2009 4:00:03 PM

That conservative radio talk show hosts on the whole were outraged by AIG execs getting bonuses was not entirely true; at least not WRT Hannity, Limbaugh, and most other talk show hosts I listen to. Not that they were ecstatic about AIG execs getting bonuses; but rather the outrage displayed by conservative talk radio show hosts was the ex-post facto 90% tax rate that served as a bill of attainder; not to mention that it was the dems who wrote the policy that made it possible for AIG to award execs with bonuses from the bailout monies.

Posted by: Leo Pusateri | Mar 27, 2009 4:08:27 PM

I don't think this is an entirely fair criticism of the Republicans( trust me I don't think I have recently said that). Anyone reading your post without context would think that it was a run-of-the- mill soak the rich tax ploy. The mitigating factor is that AIG took taxpayer money in leiu of filing bankruptcy. Had they not taken tax payer money nobody would have cared how much they received. You can't take tax payer money and expect it to be business as usual. This was the arrogance of AIG... Had it not been for the taxpayer bailing them out a lot of these bonus recepients would not have jobs let alone bonuses to worry about..AIG is now basically a GSE like Fannie and Freddie..It is ridiculous that Bush/Paulson did not make any bailout funds contigent upon restricting these types of bonuses. They should have been stopped before they even had tax consequences. Bonuses by definition are "extra" and normally the result of a company exceeding their profit and financial goals.. With AIG there was no profit from which to pay out these bonuses..

I have had the misfortune to work for a company that went through bankruptcy and believe me there were no bonuses at the height of the financial meltdown.Do you think DIP financiers would have funded these bonuses??

You don't have to be a Democrat or a "faux populist right-wing talk radio" fan to think this was beyond the pale and crony capitalism at its worst..

Posted by: sirpatrick | Mar 27, 2009 4:18:56 PM

What "faux populist right-wing talk radio hosts"? All the ones I listen to were strongly against punitive tax policy.

Posted by: dlormand | Mar 27, 2009 4:20:27 PM


Paul Ryan -R- WI commented on Squawk Box this week the the reason the Republican leadership voted for it was to show voters what it would be like if the Democraps stay in power. He said they did not have the votes to stop it so they used the opportunity to make a point.

Posted by: Don Allen | Mar 27, 2009 4:22:22 PM

Right wing talk radio?

Posted by: newpetrol | Mar 27, 2009 4:42:19 PM

"faux populist right-wing talk radio"? I thought it was union organizers who planned the "busload of activists", to go to the executives homes for the tv soundbites? Every person I spoke with was outraged at the audacity of Barney Frank, Dodd, Emanuel and that crew who are deep in the pockets of AIG and Wall Street. No one I know is upset with the bonuses - hell a contract is a contract, and Obama, Dodd, Geithner, et al signed off on whole package anyway.. It's the bailouts, stimulus, Obama's budget etc, that are freaking everyone out. See the Tea Party Protests and you'll see what I mean.. This gang reminds me of Jimmy Carter.. I lived thru Carter and promised I'd never ever vote for another Democrat for president. Going to be a scary 4 years.. regards, Jay Jones

Posted by: Jay | Mar 27, 2009 4:58:07 PM

"The only reason for the tax increase was outrage, stoked by faux populist right-wing talk radio hosts, over bonuses paid to executives of AIG,..."

The only right-wing talk radio hosts I've heard all were critical of TARP or bailouts in general, but I haven't heard any of them outraged over the retention bonuses; which were negotiated before the bailouts.

Which radio hosts do you mean, specifically?

Posted by: Les Nessman | Mar 27, 2009 5:12:30 PM

Statement by Congressman Tom McClintock
Regarding HR 1586
March 19, 2009

HR 1586 would tax 90 percent of the bonuses that push an executive's earnings above $250,000 IF his company has received more than $5 billion in federal bailout funds.

I reluctantly supported HR 1586 for a simple and singular reason: it will stop or slow the corporate bailouts that are bankrupting our country.

Until HR 1586, there has been no downside for the executives who persuaded Congress to hand them the keys to our nation's treasury and who are now plundering it with impunity. This measure takes away the personal profit for the executives who are doing so. In addition, since the bill would not apply to any corporation that returns its bailout windfall, I believe it will be a powerful incentive for companies immediately to repay the funds that Congress should never have authorized in the first place.

I do not believe the act qualifies as a bill of attainder, as some have suggested. The measure applies to any recipients of TARP money, making no distinctions among them, in the same manner as the tax code applies separate tax treatments under a wide array of circumstances.

Nor do I believe this is a tax increase in any conventional sense since it seeks solely to recover tax revenues that are being spent for purposes other than Congress approved.

I abhor a number of aspects of this bill, starting with the fact that it is necessary at all. I believe the government bailout of failed companies is prolonging and deepening our recession and for that reason I have opposed this policy every step of the way. The only justification for this bill is that it will greatly reduce the number of companies seeking or holding government bailout subsidies.

I am also deeply concerned with the use of the tax code for purposes other than generating revenue. It is a dangerous precedent justified only by the dangerous precedent of the bailouts themselves.

I will vigorously oppose any legislation seeking to interfere with compensation decisions made by private companies with private funds. But once a company has accepted government bailout funds and begins operating with public capital, it has also invited public oversight of its decisions. And that never ends well.

Posted by: Michael Newton | Mar 27, 2009 5:22:02 PM

Part of your premise is wrong in that the senior republican leadersip is not really republican. I have been wondering for sometime now if they have been replaced as in the invasion of the body snatchers but in that movie the plot was: A small-town doctor learns that the population of his community is being replaced by emotionless alien duplicates. Emotionless doesn't quite fit but the rest does :)

Posted by: Rich | Mar 27, 2009 5:24:08 PM

"The only reason for the tax increase was outrage, stoked by faux populist right-wing talk radio hosts..."

What right-wing talk radio hosts did that? None that I heard...

Posted by: Brett Rogers | Mar 27, 2009 5:27:20 PM

Call the Guiness Book of Records. The US Congress has become the single largest collection of incompetents to ever exist in one place. Unfortuneately, it would be an easy record to surpass, just add in the Obama Administration.

Posted by: William | Mar 27, 2009 6:09:28 PM

It's really too bad that people who have not yet read bills don't just vote "NAY". That can't hurt anything if the timetable being run doesn't leave time to understand what you're voting for. No one in Congress has a legitimate excuse for such wanton deriliction of their responsibility.

Posted by: elTaoseno | Mar 27, 2009 6:18:33 PM

I am shocked, shocked to find Republicans abandoning their principles. NOT!

Come on, this is nothing new. The last Republican who *really* believed in freedom, capitalism, and individual rights was Barry Goldwater.

Posted by: Dana H. | Mar 27, 2009 6:22:35 PM

That's easy to say when you're not a Congressman hoping to get re-elected in 2010.

There should be one escape clause in the bonus tax: When and if a company repays its bailout loan in full, all current and former employees hit by the 90% tax should be allowed to file amended returns at normal tax rates and collect refunds.

If banks like Wells Fargo react by returning Federal money and refusing future bailouts, good for them!

Posted by: Dave | Mar 27, 2009 6:40:54 PM

I heard the wife of one of the AIG execs who was getting a "bonus" when she called in to a radio show. The arrangement he had was that he would work for $1 on the basis that he would take a bonus at the end of the year. ? Her kids watched the President's speech while he trashed their father's company by name on national television. Not a class act, among other things.

But the biggest problem most of the "right wing" radio talk shows had was the agreement that was made by Democrat law makers, Treasury, and the White House to play "shocked! SHOCKED!" to hear about the legal bonuses -- and then try to write an (illegal) law to cover up their poor judgment. The rule of law went straight down the toilet in the Democrat Universe.

Posted by: JL | Mar 27, 2009 7:37:36 PM

There is travesty in ethics; and travesty which lies in those public servants "above the law" who continue to stay in office (and/or) receive wrist-slap for income tax evasion, embezzlement, bribes, insider trading, and many other offenses...

Law professionals of every party should unite to form solid support to enforce our Constitution; that is, before corruption completely destroys our nation in the foreign marketplace… We are almost there, now.

Perhaps you will remember an historic incident by which Europeans targeted corruption and fraud, resulting in resignation of discredited commission… Twenty Parliamentarians were forced to step down…

http://www.iht.com/articles/1999/03/17/eu.2.t_3.php

Never underestimate the power of unity, and the civilian Law community; which may very well be the last best option that America has left...

I hope I’m not terribly off topic, but it would be a travesty of justice, if we do not defend our Constitution; only to someday, have it disappear…
No mater the partisan; this would be a loss for all.

Posted by: bbay | Mar 27, 2009 9:47:14 PM

The answer to which specific "faux populist right-wing talk radio hosts" are to blame is that there are none. Rather, talk show hosts are villified as a class because any Republican who wants to appear respectable to the Left needs to include a salvo against the radio in any statement he makes.

Posted by: Fearsome Comrade | Mar 27, 2009 10:15:47 PM

Yeah, seriously, what right-wing radio hosts were arguing for the bill? Rush Limbaugh was arguing the the bonuses were rightfully paid. So was Glenn Beck. Someone else said Hannity was against the tax, too.

Who else is there? Mark Levin? Laura Ingraham? Michael Savage? Is there any credible evidence to suggest that any of them supported the tax?

Posted by: Dan M. | Mar 27, 2009 10:25:59 PM


"I reluctantly supported HR 1586 for a simple and singular reason: it will stop or slow the corporate bailouts that are bankrupting our country."

A good point.

Posted by: Ridge Runner | Mar 28, 2009 3:11:28 AM

The only reason for the tax increase was outrage, stoked by faux populist right-wing talk radio hosts, over bonuses paid to executives of AIG...

Why don't these "faux populist right-wing talk radio hosts" have any names? Jon Stewart has been ranting about this for awhile; note that he has a name. I think you just made that up. Why should I read anyone who just makes things up? Of what vbalue are you to any discussion if nothing you say can be relied on?

Posted by: ghh | Mar 28, 2009 7:09:21 AM

What's the matter with you folks. Of course the bonuses are an outrage.

I certainly agree voting for the bill of attainder (oops, I mean 90% tax) is also an outrage. And I certainly hope that the Republicans who voted for it pay dearly at the ballot box, and this means you Eric Cantor.

But going on about how the bonuses are not a outrage? Get out of town.

Posted by: Paul A'Barge | Mar 28, 2009 7:36:54 AM

Whoever said that they don't know anyone who opposes the bonuses is clearly out of touch with the majority of Americans, i.e., middle class and working class people. People are being laid off with little or no severance. There are no jobs for them elsewhere. I know people who were laid off - they worked for my former employer. Everyone I know can think of at least one person they know who has been laid off. Guess what? Not one of these people thinks it is fair to have the government bail out a corporation and then discover that corporation has paid huge bonuses to their top executives. By the way, the Bush administration was in charge when the bailout bill passed - the Democrats had nothing to do with allowing the bonuses to be paid. Many of the posters here seem to think that if a lie is big enough and they repeat it enough times, people will believe it. Sort of like the right wing mouthpieces who keep calling it the Obama recession, except most people know who is really responsible: Bush, with a lot of help from Phil Gramm, et al.

Posted by: Stephanie | Mar 28, 2009 10:27:04 AM

I hope every republican and democrat who voted for the unconstitutional bill of attainder loses his/her seat. I was of course outraged that AIG gave the bonuses but make no mistake about it but a contract is a contract is a contract and for the govt. to tamper with it goes expressly against the 4th amendment as well as section 9... congress is at fault here - start to finish. The bailouts themselves go against everything rational. Anyone with even a basic grasp on economics knows that saving dying companies is not only foolish as it rewards failure and corruption but it breeds more of both and it also uses money far more inefficiently than the taxpayers themselves would had that money never been taken from their paychecks in the first place. Normal thinking people would stop investing in corrupt/dying companies... bailouts essentially force every taxpayer to make an insanely risky "investment" that is very likely to produce little to no return.

Posted by: Nan in Can | Mar 28, 2009 2:11:43 PM