Looks like Congress figured out how to constitutionally punish AIG bonus takers (the ones with high income, at least). Of course, what is to stop AIG and other banks from switching from deferred compensation (bonus) to regular compensation (income)? What then? Slap a marginal 90% tax on incomes above $250,000 (“the rich” as they are known in Washington)?
I guess one good thing that may come out of this is when banks and other industries decide from now on to refrain from taking the federal government’s money. Even better, they might realize they are not getting their money’s worth from these politicians.
Update: A great free-market case for this law and even more severe restrictions on TARP companies. We both agree on the same outcome, that companies will likely no longer attempt to socialize losses. Still, knowing this Congress, this law will be poorly written and chock full of loopholes (here’s one). And I still don’t believe that retroactive legislation are a good idea, nor do I believe in the president set by using the tax code to punish unpopular companies.