No doubt, the hastily passed “TARP bonus tax” is riddled with potential constitutional and policy pitfalls. Even worse: It’s sexist.
The bill imposes a 90% tax on the lesser of the bonus payment received by a TARP recipient or the amount of adjusted gross income over $250,000. The threshold falls to $125,000 for a married individual filing a separate return. So married individuals filing together also only get $250,000 before triggering the 90% rate.
Consider a typical professional New York couple: Tom, age 31, put himself through business school and currently works as a research associate, earning $250,000 a year—$100,000 in base salary with a $150,000 year-end bonus. If Tom were single, that would be the end of the story: no TARP penalty tax.
But Tom is married. His wife, Anne, a law firm associate, newly minted physician or McKinsey consultant (take your pick from the thousands of jobs that work here) also put herself through graduate school. She now earns an additional $140,000 for the family.
The outcome: Anne’s income, added to Tom’s, triggers the TARP bonus tax, even though she had absolutely nothing to do with AIG, Merrill Lynch or any of the companies that received government aid last fall. Anne’s paycheck certainly doesn’t “belong to the American Taxpayer
." Surely Anne doesn’t stand for “Arrogance, Incompetence, and Greed
.” Most disturbing, Anne and Tom are penalized for being married and for Anne’s working outside of the home—the ultimate marriage penalty.
Unfortunately, Wall Street is still a boys club and this bill punishes a second household earner
. Assuming even an extremely low estimate—let’s say, only 60 percent of Wall Street executives are men—the law discriminates against married women in the paid workforce.
The TARP bonus bill may have started off with the best of intentions (disgorging improper bonuses). However, without the appropriate time and care, it ends up causing bizarre and inappropriate consequences (taxing working women like Anne). Forget AIG. This legislation should be called the Working Women’s Tax.Jacoba Urist has a J.D. and an LL.M. in Tax from NYU. Her marriage bears some similarity to Anne’s