The outrage last week on Capitol Hill over bonuses paid to AIG executives culminated in the House passing an onerous, populist-fueled tax that unfairly targets thousands of Americans and is quite possibly unconstitutional.
The 90 percent tax on bonuses paid this year to banking and lending executives sets a dangerous precedent of using the IRS as a weapon by taxing into submission any class of people that may be unpopular at the moment. The Senate needs to end the foolishness and kill the tax.
Thankfully, President Obama signalled on “60 Minutes” on Sunday that he may not be in favor of the 90 percent tax on bonuses, saying he would not “govern out of anger.”
Unfortunately, the president this week could offer up his own colossal government overreach as he considers increased oversight of executive pay and bonuses at all banks, Wall Street firms and other companies — including those that never received federal bailout money.
Mr. President, private companies that have not accepted federal bailout money are not yours to govern. That idea needs to be killed too.
Not only does Washington have to stop governing in anger, it needs to stop governing in haste.
Let’s get this straight: Congress, in great haste, gave banks and other lending companies trillions of dollars in bailout money. Then, when passing President Obama’s stimulus package — again, in great haste — Congress approved an amendment that allowed firms like AIG to accept big bonus payments.
Then, when AIG legally paid out its bonuses, Congress flipped out and, again, in great haste, overwhelmingly approved a 90 percent tax on the executives who earned bonuses.
And the 90 percent tax is not just applicable at AIG. The tax would be levied on executives at any financial institution that received bailout funds, including those banks, such as Wells Fargo, that didn’t even want the money and were basically forced to take it. Stories have surfaced of profitable companies, whose parent companies received bailout money, where executives would be penalized with this burdensome tax.
As immoral as those bonuses seem, they were legally paid, and taxing them now could violate the Constitution.
On Monday, the administration launched its plan to buy up toxic assets to rescue the banking industry. The plan relies heavily on private investment, but what private equity firm or hedge fund would give money to the federal government, knowing the government may cap their salaries and over-tax their bonuses?
Clearly, some oversight of our financial system is sorely needed. But punishing hundreds of executives because of populist anger at AIG is uncalled for, and government dabbling in how much private companies pay their employees is out of line.
