Before I get into why I support this tax, let me just state that Congress's behavior makes me sick. The fact that the government is trying to target specific kinds of employees for a tax is disgusting and, it seems to me, unconstitutional.
However, I'm still hopeful the most punitive version of this bill becomes law. Trap as many companies as possible and jack the tax as high as possible. I feel awful for writing that as the vast, vast majority of the people that received eligible bonuses don't deserve this punishment.
Nobody is more anti-tax than me, but the beauty of this is that it will have precisely the wrong outcome. It will serve to massively undermine the government's ability to convince companies to volunteer to receive bailout financing until things become drastic. This will cause a talent exodus from bailed out banks the likes of which the Pharoahs could hardly conceive. TARP money and other forms of bailout financing are increasingly going to serve as a scarlet letter and companies will avoid these capital injections until the last possible moment. This will improve the likelihood that capitalism's natural course will play out as it limits government's effectiveness.
Frankly, who on Earth will want to participate in the TALF or in the Public Private Investment Partnership? You just might find out after the fact that the government isn't so fond of your profiting with taxpayer support.
By the way, isn't the intellectually honest thing to do to make sure that these taxes also apply to all the income of government employees that make more than $250,000?
As a final aside, the dumbest aspect of this whole thing is that it only applies to bonus compensation. What? Why? What a crazy stupid incentive system that set-up creates.
The depth of the stupidity of our elected officials borders on the unfathomable.
Anyway, cheers to unintended consequences canceling out the intended consequences of prior governmental interference and thusly voiding their even worse unintended consequences.
Prediction: President Obama vetos this idiocy and he and most Senate Republicans end up on the same side of an issue for once. The problem for President Obama is it will only take a small minority of those Senate Republicans to override the veto and Chuck Grassley, who really bats more lefty than righty anyway, is clearly in favor of this. Should make for great theater.
PS: Short NYC-metro area housing. No brainer. This is just going to add to the pummeling that market is already receiving.