House OKs 90% Tax on Bonuses from Bailout Firms

I laughed when I read the headline to the article in the Oregonian, as reported by the Associated Press.  A psychologist explained on Talk of the Nation back in September that we (the American people) are experiencing a desire to “stick it to them”, which is why many of us would like to see these large companies fail rather than getting bailed out.  What’s the average mean income in the US for example?  According to the census, in 2007, it was $50,233.  Now, how much are these folks receiving bonuses getting in their annual salary?  Six figures?  A six figure salary greater than $100,000 a year?  That’s more than 2 times the median family income in the U.S.  We live off of $30,000 a year before taxes.  So, I laughed when I read that their poor little bonus of $1 million or more would be taxed at a rate of 90%.  Poor baby-AIG-failed-employees (remember, these guys are getting bonuses for doing bad work) are only allowed to keep $100,000 of every million they were issued.  How will they ever survive?

(Wow, that’s three times our annual income!  How will they survive?)

But I stopped laughing when I read one small, not very clear paragraph on how this all could have been avoided.

Republicans took Democrats to task for rushing to tax AIG bonuses worth an estimated $165 million after the majority party stripped from last month’s economic stimulus bill a provision that could have banned such payouts.  It would apply to any such bonuses issued since Dec. 31.

Did I read that correctly?  The Democrats took out instructions to forbid bonuses?  Democrats took out instructions to forbid bonuses, and when a bonus occurred, they went back to rescue, or play hero offering a solution to fix the problem… Interesting… It almost sounds as if they are creating their own job security by excluding things that would have fixed the problem to begin with…

Notes

Income – http://www.census.gov/Press-Release/www/releases/archives/income_wealth/012528.html

Oregonian article – http://tinyurl.com/cmbp6e

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