There are dozens of ideas floating around out there on how to punish AIG for the impending payment of $165 million of U.S. taxpayer money in executive bonuses. Tar and feathers have been mentioned. The New York Attorney General has issued a subpoena, something usually done only for criminal misconduct. Team Obama is jawboning like crazy. The problem is, the bonuses are going to get paid, regardless of subpoenas, jawbones or tar and feathers.
So the Administration and Congress needs to do an Al Capone on them. If you can’t nail them for bootlegging and murder, pin a tax rap on ’em. Better yet, do it in such a way that it is unfairly retroactive and puts AIG in a box from which they can’t escape without knocking down the entire string of dominoes.
The most satisfying solution at this point would be for Congress to pass legislation enforcing a 100% tax on monies paid out in executive bonuses in companies which have accepted TARP funds. If the companies have a problem with that, let them return the TARP funds and go ahead with the bonus payouts.
Sure, it’s unfair, being retroactive and all. Sure, it will probably get overturned some day in a U.S. Court of Appeals ruling, or perhaps even a Supreme Court case. In the meantime, it will give the nation’s taxpayers a good feeling, and will mute the howling mob long enough for us to enjoy March Madness.