Friday, March 20, 2009

The Scariest Tax Yet

The US House of Representatives passed a rushed bill today, levying a 90% tax on the bonuses that AIG executives received--after the government had poured billions into the insurance giant, in an effort to prop up the company and stabilize the faltering economy.

Senate Republicans have put the brakes on the measure, at least for now, in what is a rare display of governmental level-headedness. Regardless your opinion of the AIG bonuses, consider the precedent this sets. Essentially, the House (and a good part of the Senate) has said, "if we don't like what you do with your money, we'll tax it at inordinately high rates." For what it's worth, I'm not particularly fond of what AIG did with at least part of the money (that you and I, unwillingly, gave it). But I'm not interested in a government that can, at its pleasure, decide to levy a 90% tax on money that you save, spend or blow--merely because it doesn't agree with your choices.

Consider this: what if a larger-than-normal proportion of people, this year, saved their tax refunds (or used them to pay down their debt)? Many economists agree that spending stimulates a slacking economy, so it stands to reason that a great number of politicians in Washington would want us to SPEND our refunds on new stuff. Would it be OK with you if the US Government enacted a new tax: 90% of your tax refund in taxes, unless you spend it on something new (paying down old debt or putting it in savings accounts doesn't count)? I'd wager you'd be incensed.

But is this any different? You could argue that since the Government GAVE them the money in the first place, the Government should have a say into what they do with the money. I can follow that logic. But that's not what this is. This is a strongarm tactic that has absolutely nothing to do with the US Government's agreements with AIG. I say that, under NO circumstances, should our Government have the ability to apply or increase a tax because they don't agree with how an individual or corporation uses their money.

Frankly, it scares me to death.

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