We have found the one thing that can unite liberal and conservatives. Everybody opposes the AIG bonuses, but will Congressional Republicans support a proposed Democratic plan to tax them?
Rep. Gary Peters (D-MI) has introduced a bill in the House that would level a 60% tax on bonuses over $10,000 handed out by corporations where the government has 79% or more ownership. Here is Rep. Waters talking about his bill on MSNBC’s 1600 Pennsylvania Ave. with David Shuster.
This is a good idea, but is it Constitutional for the government to pass a tax that right now only includes one company? I am not sure that it is, but since the proposed law would cover any future company that the government would have to hold a 79% or more stake in, I think it would pass the Constitutional test. More importantly, the passage of this bill would be the first step in adding some restrictions and limitations to the federal bailouts that so far have had none.
This situation does present an interesting political dilemma for Republicans who since 2000 have lived by the mantra that any tax is a bad tax. The ideological question is, is a tax still bad if it used to right a wrong? If this bill does come up for a vote, House Republicans would be insane to vote against it. Republicans who would vote against a bill to tax the bonuses would be portrayed as endorsing the behavior of AIG. To put it mildly, that would be a good political position to be in.
The GOP already has the image of being the party which represents the interests of the rich and big business. The last thing the Republican Party needs is to be viewed as the party who supported AIG’s use of taxpayer money for bonuses. House Republicans are so ideologically driven that I could see them voting against this bill to maintain their principled stand against taxes, but anyone who supports AIG in this is asking to be voted out of office the next time they run for reelection.
Although the House tax plan is better than the one that is being endorsed by top Senate Democrats and Republicans that would put a tax on both the employer issuing the bonus and the employee accepting the bonus. There is even talk about limiting future bailout funds for AIG. This has gotten to the point where it is no longer a necessary PR move for AIG to do something about the bonuses, but it might also be the best business move that they could make too.