Citizen B's Favorite News: Give It Back, AIG

The House of Representatives passed a 90% tax on the bonuses paid to executives after receiving federal stimulus money.

Chris Matthews of MSNBC's Hardball had two congressman this afternoon debating whether or not it was constitutional to put that high a tax on any person's income.

I'm going to try sparking a little debate here. Pick a side and let me know how you think this should be handled.

Side A: Tax Those AIG SOB's!

American International Group received taxpayer money, saying without it the company would fail, putting millions of Americans out of work, stopping the flow of credit in the United States.

This is taxpayer money. The taxpayers through their Congressional Representatives should decide how it is taxed the same way they vote to raise or lower other federal taxes. The purpose of the bailout was not to save executives. It was to make sure the company could continue to function, to keep credit flowing. They were "too big to fail."

These employees should not keep a bonus for failing to do their job. Tax it. Give it back to the government.

From The New York Times:

“The people have said ‘no,’ ” Representative Earl Pomeroy, Democrat of North Dakota, shouted on the House floor. “In fact, they said ‘hell no, and give us our money back.’ ”

“Have the recipients of these checks no shame at all?” Mr. Pomeroy continued. Summing up his personal view of the so-far anonymous A.I.G. executives, he said: “You are disgraced professional losers. And by the way, give us our money back.”

Side B: Call the ACLU! This Is Unconstitutional!

America was built with the principle that there should be no unfair taxation of its citizens. The bonuses were an already standing part of the executives' salaries. These bonuses, even at their highest, were not exorbitantly taxed by the government. Is it right to levy a tax against this small group of people?

From The New York Times:

The inspector general for the TARP program said on Thursday that Bush administration officials knew at the time of the November agreement between the Treasury Department and A.I.G. on bailout funds that A.I.G. intended to pay bonuses. The contract between the company and Treasury “specifically contemplated the payment of bonuses and retention payments to A.I.G. employees, including A.I.G.’s senior partners,” Inspector General Neil Barofsky told a House Ways and Means subcommittee, Bloomberg News reported.

The loan had no stipulations on executive pay. It was therefore not an illegal use of the funds to pay its employees. It was protected. Without that bonus, the employees may move on to other companies. These employees are also American citizens who pay taxes, who will spend this money on gas, food, mortgages, buying cars, plane tickets, and other goods and services. Some of these employees have already volunteered to return the entirety of their bonuses.

Passing legislation this quickly does not allow for a full debate and examination of its merits and weaknesses. It also does not allow for changes. Furthermore, it is unconstitutional to tax a citizen ex post facto, after the money was received when no such tax existed.