So Congress is set to vote in a stunning, 90% tax rate on bonuses paid out to TARP firms. The logic: If you screw up the economy, no windfall for you.
If the Democrats leading the charge had the stones, then they’d apply this logic to the one man they blame for screwing the whole thing up: George W. Bush.
See, Dubya just signed a big ol’ book deal. Crown publishers is paying him a $7 million advance to writing a book called Decision Points, all about what a decider he was. Now the general wisdom is that Busch screwed things up. Seriously, ask Pelosi, Rangel, Reed or Obama and they’ll give you a whole litany of things he did wrong to get us in this mess.
If you can tax AIG bonuses at a punitive rate, is there any reason not to tax Bush? Is there some special exemption for ex-Presidents that protect them against vindictive tax policy from current politicians? Not as far as we know.
Added: As a commenter argues, the reason for taxing AIG employees like this is that they’ve received support from the government. Well, Bush’s whole windfall is based on his having a taxpayer-funded job for the last 8 years. Without our money and his time spent working from the people’s White House, he could’ve never gotten this book deal. So the same logic applies, perfectly.
In fact, our own John Carney argued for this exact same thing last November. He even called the 90% rate:
Here’s how a tax directed at recapturing the public’s political earning power could work. First, take the pre-public office salary of a politician, which we’ll call their “market value.” Subtract that from the post-public office compensation. Adjust for inflation. The result should be the “political value.” Why not tax that political value? Something like a 90% tax seems about right.
There would be lots of positive externalities to the tax. Politicians would have less incentive to cater to the demands of special interests since the financial rewards would far smaller. Businesses would have to concentrate more on producing market value since gains from buying off politicians would be much more expensive.