March 20, 2009

If Congress can tax AIG now, what next?

I don't agree with the massive bonuses awarded the AIG folks. I would like to think each one who received one would do the right thing and return it.

However, it scares me that Congress can create a tax on something that already happen.

Do these Super Powers mean they can go back in time anytime? Can they quickly pass a law that "fixes" anything the public seems to dislike? Can they tax researchers' dollars if the findings are unpopular?

Also, does Congress realize they just showed all of America they can act fast?

Speaking of taxes, University of Michigan professor Mark Perry looked at tax rates today.

Here's a snippet and chart from 90% AIG Tax Rate: Back to the 1950s
Dave Prychitko wrote The latest move to tax the bonuses at AIG is an attempt to bring about, essentially, a new marginal tax rate of 90%. We haven't seen that since the 1950s and early 1960s in the U.S. (see chart above, data here). The difference is that it is targeted to bonus-earners (non-earners?) at a particular corporation.

Mark Perry says to notice in the chart the huge increases in marginal tax rates during the 1930s, from 25% in 1931, to 63% in 1932, to 79% in 1936.


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