The method in their madness
John at Powerline writes about the special tax on bonuses that the House passed this week:
I’m stupefied to find that some people are defending the constitutionality of Nancy Pelosi’s discriminatory, confiscatory and retroactive tax on people who receive bonus income from companies that got TARP money. I would have considered it a bright line rule that the government can’t identify a class of unpopular people and impose a special tax on them. What’s next? A 100% income tax on registered Republicans, retroactive to last year? If Pelosi’s bill passes muster, why not?…
Wells Fargo didn’t want any TARP money, but the government forced it to take more than $5 billion worth, so Wells Fargo employees who receive bonuses would be subject to Pelosi’s proposed tax. Say you’re a teller at a Wells Fargo branch in Minnesota and you’re married to a lawyer who makes $250,000 this year. You get a $10,000 bonus for your good work during 2008. The government steals it all (90 percent federal plus 8.5 percent state plus, unless it’s included in the 90 percent, 3 percent Medicare). That is simply insane.
If the Pelosi bill is actually enacted into law (which I still think is doubtful) and upheld by the courts, there is no limit to the arbitrary power of Congress. In that event, we have no property rights and there is no Constitution—no equal protection clause, no due process clause, no impairment of contracts clause, no bill of attainder/ex post facto law clause. Instead, we are living in a majoritarian tyranny. As I explained here, there is nothing wrong with the AIG bonuses and no reason why they should be repaid. But even if you think it was wrong for AIG to pay them, Pelosi’s proposed confiscatory tax—total taxes would exceed 100 percent in some jurisdictions—is an outrage. If Congress can appease a howling mob of demagogues by enacting discriminatory tax legislation against a group of people who are, for the moment, politically unpopular, even though the vast majority of them have nothing to do with the supposed problems that have given rise to popular outcry—imagine, say, Congress enacting a surtax on the incomes of all homosexuals in response to a notorious case of homosexual molestation—then the idea that the Constitution affords us any sort of protection against arbitrary government power is an illusion.
Each government intrusion into the economy leads to greater intrusion. Once the government gave hundreds of billions to financial corporations, anything those corporations did as part of the normal course of their businesses that the public didn’t like would become a federal issue. Thus the AIG bonuses, which were contractually obligated and had nothing to do with the part of AIG that dealt with the mortgage backed securities, became a horrible “scandal” which then required further federal intrusion into AIG’s affairs to “cure” the scandal. The more the government interferes in businesses, the more dysfunctional the businesses become or seem to become, making further government interference seem necessary.
Whether or not the Democrats have consciously thought it out, the inherent logic of their policy is clear: it is to ruin the American economy, justifying the federal takeover of the economy.
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A. Zarkov writes:
The Democrats might be assuming that they will remain in power indefinitely. That’s possible but not likely, and even if the Republican party withers away something will take its place. If Congress can pass a special punitive tax on institutions that receive federal money, then a future Congress might employ that power in a way that future Democrats won’t like at all. For example most of our left dominated universities receive federal money and lots of it. How about a special high tax on all professors who work for universities that receive federal funds? The left would of course scream, “this is different,” but I don’t see why it would be. The Democrats should think about the unintended consequences of their actions. They could get thrown out of the House in two years; after all this happened in 1994. A future Republican Congress and president could then stage an attack on the liberal institutions that sustain Democrat power: the universities, the media, including Hollywood and the publishing industry, along with public school teachers and the legal profession. Once this genie gets out of the bottle, there’s no telling what might happen.
On the other hand, perhaps the Democrats are planning to remain in power forever, and that’s why there are seemingly indifferent to what they might unleash. If they can legalize and give the vote to 20 million illegal aliens who will in turn bring in their family members, then they might be able to assemble a permanent majority the way the PRI did in Mexico for some 70 years. In this case the American Republic is simply finished as it will become another pseudo-Marxist Latin American autocracy. Power, both military and economic will ultimately shift to China. This is why we must do everything we can to limit and frustrate the present Democrat regime.
Tim W. writes:
If the tax code is going to become a political weapon, then we should follow the Obama dictum and spread the punishment around a little more evenly. Sub-prime advocate Barney Frank threw a tantrum every time someone tried to rein in Fannie Mae, with the housing collapse being the result. I suggest a 100 percent tax and confiscation of his personal property as punishment. And since this happened on Pelosi’s watch (he’s one of her “boys” whom she protects no matter how incompetent or corrupt he is) she should be hit with the same penalties. After all, their actions cost the taxpayers trillions while the AIG bonuses are a raindrop in Lake Michigan. And didn’t Obama pal and advisor Franklin Raines walk off with a fortune from this housing pyramid scam? When do we go after it to get it back?
I was as upset about those bonuses as everyone until I found out the truth about them through a link you provided. How typical of the Obama-Pelosi worshipping mainstream media not to tell us the whole story.
LA replies:
I think Tim is referring to this and this.
Terry Morris writes:
John at Powerline wrote:
I would have considered it a bright line rule that the government can’t identify a class of unpopular people and impose a special tax on them.
I don’t quite get John’s reasoning here. The government does this very thing all the time; this certainly is not anything new. I’ll offer a couple of examples: Tobacco users are and have been an unpopular class in this country for several decades. Government imposes a special tax on this class, and has been doing so for a long long time. Sure, it’s not a confiscatory income tax, I get that. But the method is the same nonetheless—impose a special tax on a class of people that is unpopular while they’re unpopular. The wealthy have long been an unpopular class in America, and the extent that their income is taxed has generally reflected that unpopularity. Yes, even with majority Republican Congresses.
The point I’m trying to make, of course, is that imposing excessive taxation on unpopular classes of people, their income, habits and so forth, is certainly nothing new in America. Goverments at all levels understand that it’s one of the best ways of collecting revenue precisely because of the unpopularity of the class taxed. Particularly in a mob-rule democracy where universal suffrage exists.
Posted by Lawrence Auster at March 21, 2009 01:17 AM | Send