Taxation Everyone Can Believe In
Congress is showing that they can think of options when it comes to AIG. This is from Carolyn Maloney (D-NY), Chairwoman of the Joint Economic Committee:
Like many of you, I was outraged to learn over the weekend that AIG is paying out another $165 million in bonus compensation. For a company that has required $170 billion in U.S. taxpayer assistance and is 80% owned by the United States Government, this is clearly unacceptable. That is why I will be introducing legislation that will instruct the Secretary of the Treasury and the Internal Revenue Service to develop guidelines that tax at 100% any bonus compensation that is not directly related to a commission for any recipient of TARP funds where the United States government is the majority owner of the company. This will allow AIG to continue to meet their "contractual obligation" to pay these bonuses, but will ensure that the recipients are not allowed to keep this money.
Gary Peters (D-MI) has a similar proposal. As Chris Bowers notes, it would be hard in the current political environment for any member of Congress to vote against like this. The added bonus (for us, this time!) is that a vote would ferret out the real corporate whores, and because of the profile of this issue, everyone would know their names.
I hope the Congress chooses not to wait for the White House to come up with a solution. The Treasury and the Federal Reserve knew about this since the fall, and Obama's economic team had ample opportunity to design something that would work. It's time for the lawmakers to step in. They have no reason to wait for the White House to take the lead.