Pity the Grand Old Populists. One day the Republican grandees are railing against President Obama’s Treasury secretary for standing by while AIG gave bonuses to the traders who helped to wreck the economy. Then the memo comes from GOP Central that they are opposed to the Democratic move to claw back those hateful bonuses with a 90% tax. It appears that Republicans and their ideological mentors hate tax increases a lot worse than they hate nameless greedy insurance company executives. But Wall Streeters really resent it when we rubes stick our noses in their doings. They were alarmed when the House, with 85 Republicans joining the Democratic majority, passed a bill that would slap a 90% tax on bonuses for executives of government-rescued corporations whose family incomes exceed $250,000.
That tax rate would not be the highest in history—the record marginal tax rate was 94% during World War II. But some scholars believe the bonus tax bill could run afoul of the constitutional prohibition against Congress enacting a “bill of attainder.” Such a bill singles out an identifiable group for punishment. It’s an intriguing point of law, but the only way to find out for sure is for the Senate to go ahead and pass the bill and let the AIG bonus babies take it to court.
It would be fun to see how grandstanders like Sens. Mitch McConnell (R-Ky.) and Richard Shelby (R-Ala.), would vote on the bonus tax. After all, they were insistent last year that autoworkers were overpaid when they made $57,000 a year. But when Congress in February debated limits on executive pay for bailed-out businesses, McConnell declared, “I really don’t want the government to take over these businesses and start telling them everything about what they can do.” Shelby said Congress has no role in determining corporate compensation: “It should be up to the board of directors of a private corporation to set the compensation of an executive.”
