House passes bill taxing AIG, other bonuses

[jimmy olsen]

They should have addressed this problem in the bailout legislation, I don't like using taxation in this way

http://www.msnbc.msn.com/id/29771499/

House passes bill taxing AIG, other bonuses

Measure places a 90 percent tax on some bailout related bonuses

[Neil]

I would imagine that the execs will toss the Reps insurance policies and stock portfolios into the harbour.  No taxation without representation.

[Berkut]

They did address it in the bailout bill, and Obama's administration insisted on adding language protecting these kinds of bonuses.

[KRonn]

Besides being illegal and unconstitutional, this bill could have some more serious unintended consequences.

http://www.msnbc.msn.com/id/29786420/
In new dilemma, banks cite 2 paths to disaster
Whether they OK payout restrictions or return aid, execs warn of problems

[KRonn]

Smokescreen by Congress, but some of them have genuine anger. But some of that anger needs to be directed at themselves. They knew of these bonuses for weeks or longer, some of them did, even wrote the protections into the Stimulus bill. But that bill was so large, contained so much spending of all kinds over and above economic assistance, that few Congress members knew what was in it as it was rushed to passage. Now Congress is trying to save face, riding the wave of public indignation by having these dog and pony hearings of AIG. Trying to assuage public anger, but that anger is probably more directed at Congress than the convenient foil of AIG. Yes, I was and still am annoyed at bonuses so poorly structured by corps that failure is rewarded. But I'm trying to look beyond that and keep my mind on the economic issues, and what the heck is going on around it all.

[Fate]

Under suspension rules this required 2/3rds support to pass, thus the Democrats could not have successfully passed it on their own. Half of the conservative rump of the Republican party voted YEA. I doubt it's unconstitutional, unless the GOP has thrown those principles under the bus as well.

[The Minsky Moment]

They did address it in the bailout bill, and Obama's administration insisted on adding language protecting these kinds of bonuses.

That would have been a neat trick to pull, given that the AIG bailout and the bonus payout decisions both occurred during the prior administration.

The fact is that Paulson knew about this and gave the go ahead anyway.  That is not a bash on Paulson BTW b/c he was facing some real Hobson's choices and made the best call he could at the time.

[Strix]

I love Congress at work. They screw the pooch on the Bonus Issue, so they try to look good by finally doing what the people wanted in the first place.  Unfortunately, they'll probably end up spending more on lawsuits than they'll get back from AIG.

Go Dodd!

[alfred russel]

If I signed a contract to work for a year which after completion Congress then decided they wanted back the money paid to me for that year, my thoughts are that is an unreasonable seizure of my property. It amounts to Congress stiffing me for my labor. I'm not a lawyer so I don't know how that fits into the Constitutional framework, but I hope it is unconstitutional.

[Martinus]

Can the US Congrass change tax rules during the year that is subject to taxation? That would be considered unconstitutional in Poland - the rule is you can only change taxation for future years (and have to allow a proper notice, which in case of taxes is something like 3-6 months before the year begins).

[alfred russel]

Can the US Congrass change tax rules during the year that is subject to taxation? That would be considered unconstitutional in Poland - the rule is you can only change taxation for future years (and have to allow a proper notice, which in case of taxes is something like 3-6 months before the year begins).

Yes.

[Martinus]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

[dps]

Can the US Congrass change tax rules during the year that is subject to taxation? That would be considered unconstitutional in Poland - the rule is you can only change taxation for future years (and have to allow a proper notice, which in case of taxes is something like 3-6 months before the year begins).

I'm not sure, but I don't think that there's been any actual case law on it.  So I guess that they can, unless/until a court rules against it.  IIRC, they have changed tax rates during a tax year, but the times that that was done, it was to lower the tax rates, so nobody was going to challange that.

EDIT:  Alfred Russell answered "yes" while I was typing.  He's more knowledgable in this area than I am, so he's likely right.  AR, is there actual case law on this?

[dps]

That's curious. In European legal systems, the rule that law cannot impose obligations or burdens on individuals or companies retroactively is considered one of the mainstays of the rule of law.

I think the legal theory is that it's not retroactive because the taxes aren't actually due until the next year.

[alfred russel]

Can the US Congrass change tax rules during the year that is subject to taxation? That would be considered unconstitutional in Poland - the rule is you can only change taxation for future years (and have to allow a proper notice, which in case of taxes is something like 3-6 months before the year begins).

I'm not sure, but I don't think that there's been any actual case law on it.  So I guess that they can, unless/until a court rules against it.  IIRC, they have changed tax rates during a tax year, but the times that that was done, it was to lower the tax rates, so nobody was going to challange that.

EDIT:  Alfred Russell answered "yes" while I was typing.  He's more knowledgable in this area than I am, so he's likely right.  AR, is there actual case law on this?

I have no idea--I just know they adjust the current year tax code all the time.