The legislation imposes a 90% tax for bonuses received by an employee of a company that has received Troubled Assets Relief Program (TARP) funds in excess of $5 billion, as well as employees of Fannie Mae and Freddie Mac. The tax would be retroactive to December 31, 2008 and apply to income in excess of $250,000 (or $125,000 in the case of a married individual filing separately).
—Two Wrongs Don’t Make a Right. Without the bailouts, the taxpayers would never have been put in the position of their dollars being doled out for executive bonuses. But since the bonuses have been distributed, the solution is not to compound the problem with more inappropriate actions by the federal government.
—Bill of Attainder. The bill, while not mentioning AIG by name, is clearly meant to punish AIG executives who received large bonuses—a specific group of individuals in response to public outrage over the bonuses. Given this motivation, many believe that the legislation is a bill of attainder, and thus prohibited by Article I, Section 9, Clause 3 of the Constitution.
—Confiscatory Tax Rate. The legislation creates a tax rate of 90%. The income tax has not had a top marginal tax rate of that level since the Kennedy Administration. This legislation will set a precedent to apply confiscatory tax rates to other individuals in the future.
PASSED 328-93 – SEE ROLL CALL VOTE