If the 90 percent tax that the Congress and the Obama White House is looking to enact passes, it will not only hurt the 100 or so A.I.G. employees. The draconian tax will affect tens of thousands of employees in the financial sector of the economy.
Since New York City is the hub of the US Financial industry and we all have seen how important yearly bonuses are to the real estate market in Manhattan, this could have a devastating result on high end real estate sales in the city.
The tax plan approved by the House as revenge against a handful of obscenely greedy AIG executives would slam tens of thousands in the financial industry, many of them New Yorkers, who have nothing to do with AIG or any other wrongdoing.
And that would be just start of the collateral damage.
The levies are so draconian that major banks that took bailout money are threatening to give it back – defeating the purpose of jump-starting the economy with an influx of cash. via NY Daily News.
Remember, the law of unintended consequences can be very painful. Especially since Wall Street donated a great deal to the Obama campaign in the last election cycle.
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The thing that kills me about this whole AIG bonus / Congress tax mess is that Congress approved their bonuses in the first place. And for Congress to have a "Revenge" tax on greedy Wall Street executives doesn't make sense either. According to a recent article in the Rolling Stone Mag online, Wall Street gave around $1.7 Billion to Democrats over the past 10 years. http://www.rollingstone.com/politics/story/267939…
I guess we'll see what happens.
Congress may indeed pass a retroactive law like that, but it is illegal under Article 1 of the Constitution. It is called a Bill of Attainder and is specifically prohibited, mainly due to it's abuse by the British authorities.
Think about it. If it was not for the prohibition against passing laws that penalize past activity that was legal when it occurred, then Congress could go back in time and change the tax rates for the 2005 tax year, for instance, forcing all of us to cough up more money for the Feds.
They may posture, and they may pass the stupid law, but any attorney can get it thrown out of court easily.