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).

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http://www.onenewsnow.com/Headlines/...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!

[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.

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.


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

[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.