The future of the bonus tax

It passed the House, but Republicans in the Senate have slowed the process there, and it's not even clear President Obama would sign the bill.

Published March 20, 2009 5:25PM (EDT)

Thursday afternoon, the House of Representatives passed a 90 percent tax directed at the recipients of the recent round of bonuses paid out by AIG. That night, Senate Majority Leader Harry Reid wanted his chamber to take up their own version of the proposed legislation, and asked unanimous consent from the Senate to bring the bill up for a vote. But Sen. Jon Kyl, R-Ariz., blocked that maneuver, stalling until at least next week.

Senate Republicans say they want to continue to slow the rush towards passing the new tax, but given the current political climate, they probably can't stop it altogether. Still, if a version of either bill does pass the full Congress, there's still the question of whether President Obama would sign it. He's yet to give a definitive indication as to what he'll do if the legislation lands on his desk.

The Atlantic's Marc Ambinder has an interesting post on his blog about whether Obama would sign the bonus tax into law; he believes the answer is no.  "The administration worries that the bill is unconstitutional, overly punitive in some ways and too narrowly targeted in others (why companies couldn't simply figure out a non-bonus way to make up for the compensation loss is not evident), and that it does not advance the larger goal of reform," Ambinder writes. As he notes, though, the political climate will pose the same problem for the president that it does for Senate Republicans -- given public outrage at AIG, no one wants to be perceived as being on the company's side.

An increasing amount of skepticism about the bill, especially from the left, might end up providing Obama with some cover, though. The New York Times' Paul Krugman has criticized the legislation as "clumsy," saying "it will punish some innocent parties while letting the most guilty off scot-free."  And Talking Points Memo's Josh Marshall writes that the tax "strikes me as pretty ill-advised on a couple levels," saying it's both too narrow -- bonuses could simply be renamed in order to get around the tax -- and too broad, affecting people it wasn't intended to target.

By Alex Koppelman

Alex Koppelman is a staff writer for Salon.

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