Monday, March 23, 2009

Taxing TARP-Funded Bonuses

Josh Marshall offers a reader comment on the proposed 90% tax of bonuses. There's no indication that the Senate will pass a 90% tax - quite the opposite - and Obama's coming pretty close to threatening a veto. But let's take a look at the complaint:
Since his income is mostly in the form of a bonus, he thinks that the confiscation of the bonuses amount to a constitutional taking.
From a constitutional law standpoint, I think that's an argument destined to fail (even though I think the tax bill is bad policy). As for the "my bonus is really salary" argument, I'll repeat my position: if the compensation is intended as salary, it should be negotiated as salary, paid as salary, and taxed as salary (to the employee and the employer). Renegotiate right now, so that your "bonus" becomes the salary you claim it is.

If you won't do that, let's stop pretending your bonus is really salary.


  1. . . . but if they did that, they wouldn't be able to sit around at the club and talk who about who has the bigger bonus.

    Seriously, aside from cheating the tax system and, I suppose, making it a little easier to hide income that otherwise would be the subject of child support calculations, why do we have the present system? It pretty clearly doesn't have anything to do with performance.


  2. You picture a group of bankers, sitting in the steam room, talking about who has the bigger what?

    Remind me not to go to your health club. Particularly if the bankers are from Boston or New Jersey. ;-)