A Bill for the Taxpayers

19 March 2009
US lawmakers vote for bonus tax from the BBC

US lawmakers in the House of Representatives have voted in favour of a bill to levy a 90% tax on big bonuses from firms bailed out by taxpayers.


House Speaker Nancy Pelosi said: We want our money back and we want our money back now for the taxpayers.

President Barack Obama welcomed the result of the vote.

Okay, now Barack Obama is a lawyer, and at some point in her life Nancy Pelosi and all or virtually all of the Members of the House of Representatives have been exposed to Article I §8 of the United States Constitution, where it says

No bill of attainder or ex post facto Law shall be passed.
But, here the House is passing a bill to effect an ex post facto tax, which if it becomes law will be struck-down by the Supreme Court as unconstitutional. It would be the taxpayers who paid for the hopeless defense of the unconstitutional law, just as they've paid for the time spent for the House to craft and pass this unconstitutional bill. There's no attempt here to protect the money of the taxpayers; there's just a lot of posturing by Congressmen and by the President at the expense of the taxpayers.

The best that ever could have been accomplished would have been to make a precondition of the bail-out money be that those who continued employment with these firms would agree to waive some level of compensation for the previous year. (There'd still be the issue that some recipients have left the employment of these firms, and that others might refuse to waive their compensation even though it would cost the firm the state funds, and some of those who refused might have contracts that precluded their dismissal for such refusal.)

It never so much as occurred to those who designed the bail-outs to attempt to impose even those sorts of preconditions, because they regard themselves and the executives of these firms as part of a same elite, for whose benefit the bail-outs are primarily designed.

In any case, the House of Representatives, with the blessings of the President, is consciously spending money for nothing but political gain.

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3 Responses to A Bill for the Taxpayers

  • gringo says:

    Brilliant, and, I'll add two more points.

    In the insurance industry, some of the compensation is in contractual bonuses paid out based on either employment performance or employment longevity or both. Whether or not this practice is ethical under a bail-out umbrella using taxpayer funds is mostly irrelevant. This is how the employers obtain and retain the best talent. Since the Government decided that it was in their best interest to throw public funds into a failing business that has always executed such a practice, then it makes no sense that the Government shouldn't have known where the money would go.

    Similarly, and a better example, is how bail-out money to auto-makers is being invested in manufacturing facilities in foreign countries. Such manufacturing facilities are the most profitable ones. For the Government to expect General Motors, for example, to throw money into parts of its operations that have not been successful (and likely will never be successful), is unreasonable.

    And the most ironic part of the AIG bonus tax is this: The current administration and its supporters enjoy employing very broad Keynesian theory to support its reaction and solution to fixing an economy in recession, which is (simply stated) to get people to spend money. In essence, and ostensibly in practice, the bonus money would go directly into the economy, spent by the employees who received the bonus money. Furthermore most of the merchandise (State sales tax) and indirectly the services obtained (State and Federal income tax) from such spending would be taxable as well. Regardless of the bad taste left in the mouths of their constituents, the elected representative should be realizing this as a win-win.

    This assumes that the elected representative believes in the Keynesian model’s effectiveness in this particular attempt at economic recovery. And it presumes, apparently incorrectly, that such elected representatives do what they believe is in the best interest of the people they represent.

  • gringo says:

    P.S. I actually went on National Radio this evening (last evening, I reckon), and stated your observation. Just wanted you to know.

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