House introduces top income tax rate of 90%

[Little-Acorn]

The House is scheduling a vote on a new top tax rate for the highest-paid employees, presently to be applied only to employees of companies that get big Federal bailout packages.

The new tax rate is supposedly for people getting bonuses, but seems to be worded in such a way that it will be levied on ANYONE in the company whose income exceeds $250,000.

Joe the Plumber raised the issue of Obama raising taxes for people like himself, who might purchase a business whose receipts could be legally interpreted by the IRS as "income" above that level. But no one dreamed the increase would be so draconian.

There's even a quote from Charlie Rangel, who seems happy that state governments can tax away the other 10% of people's incomes.

Not since the depths of World War 2 have tax rates been so high.

Elections have consequences. And when you elect a bunch of extreme leftists to the national government, as we did last November, tax increases are one of those consequences. Even shockingly high ones.

We get the government we deserve.

As mentioned, some of the leftists are assuring us that these 90% tax rates are presently only for people getting bonuses the leftists don't approve of. The fact that this sets an ominous precedent, is to be dismissed.

Can I have a show of hands, of those who honestly believe that tax rates for the rest of us will NOT start heading in that direction pretty soon? After a 90% tax rate like this, hiking rates on the rest of us to a mere 50% or 60% should be much less shocking.

BTW, the Senate is currently considering taxes up to 70% (35% for the employer and 35% for the employee).

----------------------------------

http://www.onenewsnow.com/Headlines/Default.aspx?id=457634

House to vote on 90 percent tax for AIG bonuses

By STEPHEN OHLEMACHER, Associated Press Writer Stephen Ohlemacher, Associated Press Writer 1 hr 2 mins ago

WASHINGTON – The House is scheduled to vote today on a bill that 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.

"We figured that the local and state governments would take care of the other 10 percent," said Rep. Charles Rangel of New York, chairman of the tax-writing House Ways and Means Committee.


(Full text of the article can be read at the above URL)

[Yurt]

this seems very close to a bill of attainder

[Little-Acorn]

this seems very close to a bill of attainder

Well, the Constitution forbids bills of attainder, but gives Congress the power to levy taxes. I guess what you call it, matters.

The Const does, of course, forbid ex post facto laws, which is what a law would be if it taxed bonuses people received before the law was passed. But Bill Clinton put exactly such a law into place in 1993, when he made his tax increases retroactive to before the passage date.

Count on the leftists to use this as a precedent.

This is only the beginning.

Four more years.

[moderate democrat]

Four more years.

or eight, if we're lucky!:dance:

[DannyR]

The new tax rate is supposedly for people getting bonuses, but seems to be worded in such a way that it will be levied on ANYONE in the company whose income exceeds $250,000.

I don't see that.

Here is the text of the bill for any interested:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. BONUSES RECEIVED FROM CERTAIN TARP RECIPIENTS.

(a) In General- In the case of an employee or former employee of a covered TARP recipient, the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for any taxable year shall not be less than the sum of--

(1) the tax that would be determined under such chapter if the taxable income of the taxpayer for such taxable year were reduced (but not below zero) by the TARP bonus received by the taxpayer during such taxable year, plus

(2) 90 percent of the TARP bonus received by the taxpayer during such taxable year.

(b) TARP Bonus- For purposes of this section--

(1) IN GENERAL- The term `TARP bonus' means, with respect to any individual for any taxable year, the lesser of--

(A) the aggregate disqualified bonus payments received from covered TARP recipients during such taxable year, or

(B) the excess of--

(i) the adjusted gross income of the taxpayer for such taxable year, over

(ii) $250,000 ($125,000 in the case of a married individual filing a separate return).

(2) DISQUALIFIED BONUS PAYMENT-

(A) IN GENERAL- The term `disqualified bonus payment' means any retention payment, incentive payment, or other bonus which is in addition to any amount payable to such individual for service performed by such individual at a regular hourly, daily, weekly, monthly, or similar periodic rate.

(B) EXCEPTIONS- Such term shall not include commissions, welfare or fringe benefits, or expense reimbursements.

(C) WAIVER OR RETURN OF PAYMENTS- Such term shall not include any amount if the employee irrevocably waives the employee's entitlement to such payment, or the employee returns such payment to the employer, before the close of the taxable year in which such payment is due. The preceding sentence shall not apply if the employee receives any benefit from the employer in connection with the waiver or return of such payment.

(3) REIMBURSEMENT OF TAX TREATED AS TARP BONUS- Any reimbursement by a covered TARP recipient of the tax imposed under subsection (a) shall be treated as a disqualified bonus payment to the taxpayer liable for such tax.

(c) Covered TARP Recipient- For purposes of this section--

(1) IN GENERAL- The term `covered TARP recipient' means--

(A) any person who receives after December 31, 2007, capital infusions under the Emergency Economic Stabilization Act of 2008 which, in the aggregate, exceed $5,000,000,000,

(B) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation,

(C) any person who is a member of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, determined without regard to paragraphs (2) and (3) of subsection (b)) as a person described in subparagraph (A) or (B), and

(D) any partnership if more than 50 percent of the capital or profits interests of such partnership are owned directly or indirectly by one or more persons described in subparagraph (A), (B), or (C).

(2) EXCEPTION FOR TARP RECIPIENTS WHO REPAY ASSISTANCE- A person shall be treated as described in paragraph (1)(A) for any period only if--

(A) the excess of the aggregate amount of capital infusions described in paragraph (1)(A) with respect to such person over the amounts repaid by such person to the Federal Government with respect to such capital infusions, exceeds

(B) $5,000,000,000.

(d) Other Definitions- Terms used in this section which are also used in the Internal Revenue Code of 1986 shall have the same meaning when used in this section as when used in such Code.

(e) Coordination With Internal Revenue Code of 1986- Any increase in the tax imposed under chapter 1 of the Internal Revenue Code of 1986 by reason of subsection (a) shall not be treated as a tax imposed by such chapter for purposes of determining the amount of any credit under such chapter or for purposes of section 55 of such Code.

(f) Regulations- The Secretary of the Treasury, or the Secretary's delegate, shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.

(g) Effective Date- This section shall apply to disqualified bonus payments received after December 31, 2008, in taxable years ending after such date.

http://www.thomas.gov/cgi-bin/query/z?c111:H.R.1586:


Key word is in Section 1.b.1 where they note "lesser".

Then they define what the bonus is in 1.b.2.A

So to pay the tax, you have to first have a bonus (an amount paid in addition to a regular wage). If you don't, then that amount is zero, which is automatically the lesser of the two amounts.

And it doesn't tax every bonus. If your bonus is $5000, but that only puts your salary up to 250,001, then you would only be taxed $0.90 as well. 90% of the $1 you were over.

[Yurt]

Well, the Constitution forbids bills of attainder, but gives Congress the power to levy taxes. I guess what you call it, matters.

The Const does, of course, forbid ex post facto laws, which is what a law would be if it taxed bonuses people received before the law was passed. But Bill Clinton put exactly such a law into place in 1993, when he made his tax increases retroactive to before the passage date.

Count on the leftists to use this as a precedent.

This is only the beginning.

Four more years.

true...courts often look at the intent of the bill, here, it is clear that congress is creating the bill solely for one purpose, to punishment specific people. while they make it a general law, legislative intent, imo, clearly shows this is directed at certain people which imo, should violate the law against bills of attainder.

[Little-Acorn]

So, my principal question still remains:

Can I have a show of hands, of those who honestly believe that tax rates for the rest of us will NOT start heading in that direction pretty soon? After a 90% tax rate like this, hiking rates on the rest of us to a mere 50% or 60% should be much less shocking.

[DannyR]

So, my principal question still remains:

Can I have a show of hands, of those who honestly believe that tax rates for the rest of us will NOT start heading in that direction pretty soon? After a 90% tax rate like this, hiking rates on the rest of us to a mere 50% or 60% should be much less shocking.I doubt Obama or Dems will significantly raise taxes on people below $250K. So with that limit, I don't make nearly enough money to be taxed at that rate.

You rich folk however are screwed. :poke:

Still not certain how retroactive laws over past actions can be legal, but when it comes to the tax code this happens all the time. Another point where precedent likely out ways the letter of the Constitution.


clearly shows this is directed at certain people which imo, should violate the law against bills of attainder.Just curious, but how is this bill any different than say a bill that places a tax on cigarettes or luxury taxes on things like yachts?

And aren't bills of attainder pretty much restricted to punitive actions, not civil, same as the ex post facto laws discussed in the other thread.

[Yurt]

I doubt Obama or Dems will significantly raise taxes on people below $250K. So with that limit, I don't make nearly enough money to be taxed at that rate.

You rich folk however are screwed. :poke:


Just curious, but how is this bill any different than say a bill that places a tax on cigarettes or luxury taxes on things like yachts?

And aren't bills of attainder pretty much restricted to punitive actions, not civil, same as the ex post facto laws discussed in the other thread.

i believe this is a punitive action. it is different in intent than the other taxes you mention. while they couch the bill in general monetary terms, would you agree that the legislative intent is not general and the sole reason for this bill was in response to the bonuses....in that, but for the bonus issue, this bill never would have been introduced.

[avatar4321]

Massive overspending

Taxing the highest producers 90% of their income.

Printing money to pay off debts


It's clear to me that this administration doesnt want economic recovery. This is completely insane unless you want to destablize the nation for an attempt to seize absolute power.

Last time a super power tried to print their way out of economic recession, Hitler seized power.

[DannyR]

Yeah, intent is certainly specific here.

Now I wonder if Congress is going to tax all the huge fees lawyers will be charging when they argue this case over the next few years.

[Yurt]

Yeah, intent is certainly specific here.

Now I wonder if Congress is going to tax all the huge fees lawyers will be charging when they argue this case over the next few years.

nah, many in congress are lawyers :coffee:

[PostmodernProphet]

Just curious, but how is this bill any different than say a bill that places a tax on cigarettes or luxury taxes on things like yachts?


anyone who has followed the news in the last two days knows that this tax bill has only one purpose.....taking back the AIG bonuses.....now matter how carefully they worded it, it is obviously a targeted tax.....

[PostmodernProphet]

Yeah, intent is certainly specific here.

Now I wonder if Congress is going to tax all the huge fees lawyers will be charging when they argue this case over the next few years.

I would say it is only a simple step to imposing a 90% tax on fees earned representing persons who 1) received a bonus, 2) from a company receiving a bailout, 3) who had that bonus taxed away, and 4) took legal action complaining about the above.....

[theHawk]

If the idiots in Washington want to penalize anyone for AIG bonus, they should tax themselves for approving the bonuses. Not private citizens recieving pay from a contract.

[Immanuel]

nah, many in congress are lawyers :coffee:

True, but most are not practicing law at the moment and have no intention of ever practicing law again. Everyone of them expect to have a job for life in Congress just like Ted Kennedy has as a Senator and should they decide to retire they have a hell of a pension to boot!

They'll tax those lawyer's fees if they can find a way.

Immie

[emmett]

The whole damn issue is sickening and we shouldn't even be having this discussion!

America's productive people have been hoodwinked by their lazy irresponsible neighbors, their college kid children, undesireable queer outcast family members, minorities, relatives of illegal immigrants living in our country, an irresponsible press and a power hungry political corp....... who have cleverly banded together (all but the two later entities being hoodwinked themselves), to create an eviornment that threatens to destroy every core value that our republic stands for!

[Kathianne]

Consider that Obama has been in office 2 months, how many 'targets', 'diversions' have there been? Today it's AIG and Fannie, tomorrow? Between the President, the oafs in Congress, and the press, there's no problem creating the next 'target.' They are undermining the economic and cultural fabric of the country.

[5stringJeff]

Screw this administration. Really. I mean, Bush was far from a conservative, economically speaking, but Obama is to the left of FDR. What the hell is wrong with this country!?! :mad:

[Yurt]

Screw this administration. Really. I mean, Bush was far from a conservative, economically speaking, but Obama is to the left of FDR. What the hell is wrong with this country!?! :mad:

i've wondered this as well. i can't pinpoint one thing or even a small set of things. it seems to be a plethora of things, events, people that have turned this country from the land of opportunity to the land of take care of me because i am entitled by virtue of being here and please for pete's sake create laws that outlaw anything that could possibly harm me because i can't think for myself....which brings us to the government needs to take my money and spend it for me because i can't be trusted to spend my money in the best interest of the country.

where has our pioneer spirit gone? where has our desire to succeed not because we get a hand out, but by our own merit or bootstraps? where has personal liberty gone? why has the term "general welfare" become a rallying cry for those who wish the government to take care of our every need?

[bullypulpit]

this seems very close to a bill of attainder

Pretty much so. It'll die in the Senate. Even if it did pass and be signed into law, it would never pass constitutional muster in the courts. It's just a bit of populist kabuki theater masking the true source of outrage on the matter...the utter lack of accountability by the folks who blew a hole in the US, and world, economy.

[bullypulpit]

Screw this administration. Really. I mean, Bush was far from a conservative, economically speaking, but Obama is to the left of FDR. What the hell is wrong with this country!?! :mad:

So, it's all Obama's fault? Really...if you want to track back to the roots of this economic cluster-fuck, you need to go back to the Reagan era and the deregulatory, laissez-faire attitude that administration espooused and the GOP carreid forth to this very day.

Unregulated free markets of the type envisaged by Milton Friedman, Ronald Reagan, the GOP and the Bush administration presuppose a rational society. Something that has yet to appear on the face of this earth. If you want to see the ultimate, and bitter, fruits borne by such plans, look to Indonesia under Suharto...Chile under Pinochet...Argentina under their military junta and, more recently, China under their particular brand of despotism.

[bullypulpit]

bump

[Little-Acorn]

Since we're bumping theings and trying to point fingers back into history, I figured a little detail was needed, and even a little accuracy.

----------------------------------

The Federal National Mortgage Association (FNMA, or "Fannie Mae") was created in 1938 during the Great Depression. to create a market for mortgages where they could be bought and sold.

In 1968, Lyndon Johnson and a Democratic Congress spun off Fannie Mae so that it would not show up in the Federal budget. But the Federal govt was always there, ready to bail out Fannie Mae if problems happened. This enables Fannie Mae to offer lower rates for the mortgages it bought, since it was not taking the risks that other banks and institutions had to. In 1970, the Federal Home Loan Mortgage Corporation ("Freddie Mac") was formed, to create competition for Fannie Mae, since ordinary banks could NOT compete with the government-backed rates they offered.

The Community Reinvestment Act (CRA) was passed by a Democrat Congress and signed by Jimmy Carter in 1977. It made sure banks were lending to people of all colors and income levels. But things quickly began going off the rails, as activist groups found a new weapon in the law: They could start suing lenders for discrimination if they didn't lend to enough minority families, regardless of the families' ability to pay the loans back as promised. Banks began making riskier and riskier loans for fear of having to fight expensive lawsuits.

Community groups began bullying the banks, especially one called the Association of Community Organizers for Reform Now ("ACORN"). It hired several specialized lawyers, including a young man named Barack Obama, to teach its employees how to go to the homes of bank CEOs and senior officers, harassing and publicly embarrassing them while remaining within the limits of local law to avoid prosecution. At one point, ACORN brought a lawsuit against a thrift merger in Illinois, insisting that the lending institutions had not made as many loans to minorities as ACORN thought they should. The bank replied that such loans would be financially irresponsible, and would put ALL the bank's customers at unacceptable risk. ACORN prevailed in court, and banks began making more and more risky loans to home buyers who could have never qualified for those loans under ordinary circumstances.

In late 2000, in the last days of the Clinton administration, the government ordered Fannie and Freddie to increase the numbers of these risky ("sub-prime") mortgages they were buying from banks and lending institutions across the country. They did, lowering their rates and buying more and more, until fully half their portfolios consisted of these risky sub-prime mortgages, combined and packaged in various ways.

The Bush administration raised red flags starting in April 2001. Their 2002 Budget Request declared that the size of mortgage giants Freddie Mac and Fannie Mae is "a potential problem" because financial trouble in either one of them "could cause strong repercussions in financial markets".

In 2003, the White House warning about Fannie and Freddie, was upgraded to a "Systemic Risk that could spread beyond just the housing sector".

As Fannie and Freddie continued to lower their rates and buy mortgages, lenders made more and more mortgages to buyers with questionable ability to pay, safe in the knowledge that they could immediately turn around and sell the mortgages to the government-sponsored Fannie and Freddie, thus avoiding any consequences if the loans were later defaulted. They were happy to make more and more such mortgages, collecting fees for each and selling the mortgages to F&F.

Countrywide Financial chairman Angelo Mazzillo literally started screaming at Wall Street Journal editor Paul Gigot, when Gigot asked him about the wisdom of making so many loans to buyers unlikely to pay them back. Mazzillo insisted loudly that Gigot had no idea what he was talking about, did not understand the first thing about mortgage lending, etc., etc. He failed, however, to answer any of Gigot's questions in even the simplest terms or explain why they were "wrong".

In Fall 2003, the Bush Admin was pushing Congress hard to create a new Federal agency to regulate and supervise Fannie and Freddie, both Government Sponsored Entities, or GSEs.

At a Congressional hearing on Sept 10, 2003, John Snow, Secretary of the Treasury stated: "We need a strong, world-class regulatory agency to oversee the prudential operations of the GSE's, and the safety and soundness of their financial activities."

At that same hearing, ranking member of the House Financial Services Committee Barney Frank (D-MA) defended his practices with regard to Fannie Mae and Freddie Mac: "Fannie Mae and Freddie Mac, are not in a crisis."

Frank said the Fed Govt should be encouraging F&F to do more to get low-income families into homes:
"The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up a possibility of serious financial losses to the treasury - which I do not see, I think we see entities which are fundamentally sound financially and can withstand some of the disaster scenarios - the more pressure there is there, then the less I think we see in terms of 'affordable housing' ".

The top executives at F&F began cooking their books, exaggerating their sales in their quarterly reports, so that the company officials could claim they had met their companies' sales targets, and thus collect huge salary bonuses. They were finally caught in 2004. Several of them stepped down, but none of them was every punished, or even charged. One of them, Franklin Raines, CEO of Fannie Mae, later gave financial and housing advice to the campaign of Presidential contender Barack Obama.

At a House Financial Services Committee Hearing on Feb. 17, 2005, Alan Greenspan warned against one of the fundamental ideas of modern liberalism, the idea of putting all our eggs in one basket by concentrating financial activity into just a few big agencies in central government: "... Enabling these institutions to increase in size - and they will once the crisis in their judgment passes - we are placing the total financial system of the future at a substantial risk."
He later added at another hearing on on April 6, 2005: "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis."

Senator Charles Schumer (D-NY) ignored any possibility the F&F might be in trouble at that hearing, and simply pointed to the advantages some people had gotten from the government's activities: "I think Fannie and Freddie ... are an intrinsic part of making America the best-housed people in the world... if you look over the last 20 or whatever years, they have done a very, very good job."
Schumer also complained, "Things are good in the housing market. Why are people entertaining radical change?"

On April 7, 2005, Treasury Secretary John Snow warned again: "These large portfolios, unchecked in their growth over the last decade or so, pose a real problem." The Senate Banking Committee adopted strong regulation that would have prevented Fannie and Freddie from acquiring these bad mortgages. All of the Republicans on the committee voted for it, and all the Democrats voted against it, and it passed out of the committee on a straight party-line vote. But Democrats then filibustered the bill on the Senate floor, preventing it from being brought to a vote.

Freddie Mac and Fannie Mae was active in making campaign contributions to politicians, from money that ostensibly was for low-income mortgages. The top two recipients were:

Christopher Dodd (D-CT): $165,000
Barack Obama (D-IL): $126,000

The highest-receiving Republican was Bob Bennett (R-UT), who got $108,000. Further down the list was John McCain (R-AZ), who accepted $25,000.

On May 25, 2006 in the Senate, John McCain (R-AZ) sounded more warnings over the huge size and lack of discipline in the government companies, and sponsored a bill to regulate the companies more firmly: "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac... and the sheer magnitude of these companies and the role they play in the housing market... the GSEs need to be reformed without delay." McCain's bill was voted out of committee on a straight party-line vote: All Republicans voted for it, and all Democrats voted against. Democrats then announced they would filibuster the bill in the Senate, as they had the previous year's regulatory legislation. Republicans knew they did not have enough votes to achieve the 60% needed, and so never brought the bill to the Senate floor.

By the beginning of 2008, Fannie Mae and Freddie Mac had bought up over $4 trillion in mortgages, roughly one-quarter of which was risky sub-prime mortgage paper. With interest rates rising, these rickety homeowners started defaulting on their loans. Only about 2% of them defaulted by January 2008, but the effect was disastrous. Banks began to get leery of lending money to each other, knowing that their fellow banks held substantial assets that might default and become worthless, thus making the banks unable to pay back their loans to each other.

Banks and lending institutions began collapsing or seeking emergency help: Countrywide Financial, Lehman Brothers, insurer AIG, Bear Stearns, IndyMac bank, etc. buckled to their knees as paralysis spread. The huge numbers of risky subprime mortgages, had become like a "poison pill" that choked the institutions that had swallowed them. The Fed finally took over Freddie Mac and Fannie Mae, but the damage had long been done.

Congress appropriated nearly $1 trillion in emergency funds to loan to, or otherwise prop up, failing financial institutions. But none of the original legislation that had spurred decades of risky lending, has been repealed in all the "bailout" frenzy, and there are no bills pending to do so.

[PostmodernProphet]

So, it's all Obama's fault? Really...if you want to track back to the roots of this economic cluster-fuck, you need to go back to the Reagan era and the deregulatory, laissez-faire attitude that administration espooused and the GOP carreid forth to this very day.

considering the fact that 90% of the mortgages that were written during the Reagan administration have already been paid off, I think it unlikely you can blame him for the current mortgage failure rate.....

[Kathianne]

Pretty much so. It'll die in the Senate. Even if it did pass and be signed into law, it would never pass constitutional muster in the courts. It's just a bit of populist kabuki theater masking the true source of outrage on the matter...the utter lack of accountability by the folks who blew a hole in the US, and world, economy.

Yet those you consider 'the folks' are gone and the wisest, smartest, most cultured fellow is there, and the crap goes on. Good bank, being pressured to lend to risky:

http://www.usnews.com/blogs/capital-commerce/2009/3/17/yes-the-community-reinvestment-act-really-did-help-cause-the-housing-crisis.html


Yes, the Community Reinvestment Act Really Did Help Cause the Housing Crisis
March 17, 2009 09:42 AM ET | James Pethokoukis | Permanent Link | Print

There has been a lot of push back against the idea that the Community Reinvestment Act nudged banks to give mortgages to people who should have not gotten them. But then here comes this fantastic story, courtesy of the Boston Business Journal, about East Bridgewater Savings in Boston:


Bad or delinquent loans? Zero. Foreclosures? None. Money set aside in 2008 for anticipated loan losses? Nothing. ... The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts. “We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

Yet the FDIC has turned up the heat on Petrucelli's bank, giving it an apparently rare "needs to improve rating," for not making more risky loans under the Community Reinvestment Act. Here is how the FDIC puts it: “There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area. The FDIC examiners also faulted East Bridgewater "for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages."

....

[sgtdmski]

I don't see that.

Here is the text of the bill for any interested:

Key word is in Section 1.b.1 where they note "lesser".

Then they define what the bonus is in 1.b.2.A

So to pay the tax, you have to first have a bonus (an amount paid in addition to a regular wage). If you don't, then that amount is zero, which is automatically the lesser of the two amounts.

And it doesn't tax every bonus. If your bonus is $5000, but that only puts your salary up to 250,001, then you would only be taxed $0.90 as well. 90% of the $1 you were over.

Yes Section 1 (b)(1) does state the lesser of, however, Section 1(b)(i) and (ii) makes clear that any employee that makes over $250,000 will pay 90% tax on all money over the $250,000 mark.

So it is not only the bonuses but the salaries as well. Seems to me that this bill was written and passed solely on the basis of petty jealousy.

I guess Congress is pissed that the can't milk any more money out of the tax payers than they already have for their own compensation.

dmk

[sgtdmski]

anyone who has followed the news in the last two days knows that this tax bill has only one purpose.....taking back the AIG bonuses.....now matter how carefully they worded it, it is obviously a targeted tax.....

But the only good thing about this bill is that I believe it will apply to Fannie and Freddie as well. Especially seeing how some of the bonus paid by these companies have been paid using bail out money.

dmk

[PostmodernProphet]

I wonder if the language of the bill will permit collecting the tax on bonuses paid to bailed out companies BEFORE they received bail outs.....I'm thinking of some high level Obama campaign personnel who took a lot of green with them when they left Fanny and Freddy.....

[DannyR]

I wonder if the language of the bill will permit collecting the tax on bonuses paid to bailed out companies BEFORE they received bail outs.....I'm thinking of some high level Obama campaign personnel who took a lot of green with them when they left Fanny and Freddy.....What were the dates they left? The bill sets a date of post Dec 31, 2007 for companies that received TARP funds.

[Missileman]

But the only good thing about this bill is that I believe it will apply to Fannie and Freddie as well. Especially seeing how some of the bonus paid by these companies have been paid using bail out money.

dmk

I do think it was wrong for a bailed out company to hand out bonuses, but I think it equally wrong for Congress to target a specific group of people and confiscate their money. If they can do it to them, they can do it to any of us.

[PostmodernProphet]

What were the dates they left? The bill sets a date of post Dec 31, 2007 for companies that received TARP funds.

ah, not far enough back to catch Johnson or Raines, then.....

[Kathianne]

Great criticism from NY Times. :laugh2:


http://www.nytimes.com/2009/03/21/business/21nocera.html?_r=2&hp=&pagewanted=print


March 21, 2009
TALKING BUSINESS
The Problem With Flogging A.I.G.

By JOE NOCERA

... Should it become law, it will affect tens of thousands of employees who had absolutely nothing to do with creating the crisis, and who are trying to help fix their companies.

... the real culprits — like Joseph J. Cassano, the former head of A.I.G.’s financial products division— are counting their money in “retirement.” Nobody on Capitol Hill seems much interested in getting that money back. (... does nothing about bonuses that were paid before 2009, meaning that most of those egregious Merrill Lynch bonuses, paid at the end of last year, will not be touched.)

... Back then, the issue was the disintegration of the financial system, as the Lehman bankruptcy set off a terrible chain reaction. Now I’m worried that the political response is making the crisis worse. The Obama administration appears to have lost its grip on Congress, while the Treasury Department always seems caught off guard by bad news.

And Congress, with its howls of rage, its chaotic, episodic reaction to the crisis, and its shameless playing to the crowds, is out of control. This week, the body politic ran off the rails.

... “We need to stop committing economic arson,” Bert Ely, a banking consultant, said to me this week. That is what Congress committed: economic arson.

How is the political reaction to the crisis making it worse? Let us count the ways.

IT IS DESTROYING VALUE During his testimony on Wednesday, Mr. Liddy pointed out that much of the money the government turned over to A.I.G. was a loan, not a gift. The company’s goal, he kept saying, was to pay that money back. But how? Mr. Liddy’s plan is to sell off the healthy insurance units — or, failing that, give them to the government to sell when they can muster a good price....

In other words, it is in the taxpayers’ best interest to position A.I.G. as a company with many profitable units, worth potentially billions, and one bad unit that needs to be unwound. Which, by the way, is the truth. But as Mr. Ely puts it, “the indiscriminate pounding that A.I.G. is taking is destroying the value of the company.” Potential buyers are wary. Customers are going elsewhere. Employees are looking to leave. Treating all of A.I.G. like Public Enemy No. 1 is a pretty dumb way for a majority shareholder to act when he hopes to sell the company for top dollar....

[Yurt]

nice info kathianne:


Treating all of A.I.G. like Public Enemy No. 1 is a pretty dumb way for a majority shareholder to act when he hopes to sell the company for top dollar....

i can't see the US government selling aig for a profit, especially now...but that aside....a majority shareholder out to lynch its own management....

yes, that always works wonders in the business world.....

[bullypulpit]

considering the fact that 90% of the mortgages that were written during the Reagan administration have already been paid off, I think it unlikely you can blame him for the current mortgage failure rate.....

Remember the S & L crisis? The S&L's were deregulated under the Reagan administration. The Glass-Steagall act was gutted by Phil Gramm and the GOP controlled Congress in 1999 with the Gramm-Leach-Bliley Act, which allowed insurers, commercial banks and investment banks to merge...a violation of anti -trust laws under Glass-Steagall.

You missed the point.. again.

[bullypulpit]

Since we're bumping theings and trying to point fingers back into history, I figured a little detail was needed, and even a little accuracy.

----------------------------------

Can ya maybe provide a :link: to the source so I read it in full and refute it?

[Kathianne]

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Can ya maybe provide a :link: to the source so I read it in full and refute it?

Looks to be here:

http://www.fundinguniverse.com/company-histories/Fannie-Mae-Company-History.html

[Kathianne]

nice info kathianne:



i can't see the US government selling aig for a profit, especially now...but that aside....a majority shareholder out to lynch its own management....

yes, that always works wonders in the business world.....

I did a mistype, leaving off ellipsis after the sell, from the article:


or, failing that, give them to the government to sell when they can muster a good price. obvious reference to the 'future'.

[PostmodernProphet]

Remember the S & L crisis? The S&L's were deregulated under the Reagan administration. The Glass-Steagall act was gutted by Phil Gramm and the GOP controlled Congress in 1999 with the Gramm-Leach-Bliley Act, which allowed insurers, commercial banks and investment banks to merge...a violation of anti -trust laws under Glass-Steagall.

You missed the point.. again.

I missed the point?.....perhaps then you can explain your point to me....explain to me how this caused the crisis instead of the government taking banks to court to FORCE them to issue loans to people incapable of making their payments....don't talk to me about a LACK of government oversight, when the oversight that WAS provided included suing banks because they had not issued enough bad loans....tell me that it wasn't caused by quasi-governmental organizations like the FFs buying bad loans to provide the banks with even more money to throw around.....then selling those bad loans with taxpayer guarantees with wanton abandon.....tell me we don't have the very people who orchestrated this problem currently in charge of the government charged with the responsibility of solving the problem......actively engaged in repeating the error on a massive governmental scale......tell me that with a straight face.....

[Kathianne]

I missed the point?.....perhaps then you can explain your point to me....explain to me how this caused the crisis instead of the government taking banks to court to FORCE them to issue loans to people incapable of making their payments....don't talk to me about a LACK of government oversight, when the oversight that WAS provided included suing banks because they had not issued enough bad loans....tell me that it wasn't caused by quasi-governmental organizations like the FFs buying bad loans to provide the banks with even more money to throw around.....then selling those bad loans with taxpayer guarantees with wanton abandon.....tell me we don't have the very people who orchestrated this problem currently in charge of the government charged with the responsibility of solving the problem......actively engaged in repeating the error on a massive governmental scale......tell me that with a straight face.....

Indeed, look back at #26. They are still doing it.

[5stringJeff]

So, it's all Obama's fault? Really...if you want to track back to the roots of this economic cluster-fuck, you need to go back to the Reagan era and the deregulatory, laissez-faire attitude that administration espooused and the GOP carreid forth to this very day.

Unregulated free markets of the type envisaged by Milton Friedman, Ronald Reagan, the GOP and the Bush administration presuppose a rational society. Something that has yet to appear on the face of this earth. If you want to see the ultimate, and bitter, fruits borne by such plans, look to Indonesia under Suharto...Chile under Pinochet...Argentina under their military junta and, more recently, China under their particular brand of despotism.

There hasn't been economic laissez-faire in this country since at least 1913, when the Federal Reserve was created to "manage" the economy. And you are incorrect about the presuppositions of laissez-faire. It does not presuppose a rational society, it presupposes rational individuals. You see, Big Brother cannot presume to know what type of goods each person wants or needs from day to day, month to month, or year to year. If government were able to do this, the Soviets would have won the Cold War and China would not be going all in on capitalism. This is the fundamental difference between those who believe in the free market and those who believe in some form of government control in the market: the formar realize that individuals know best what to do for themselves, and the latter naively think they know better than others.