The 90% AIG Tax Is Lousy Tax Policy

And it ain't just me that thinks so:

Frankly, it doesn't bother me in the slightest if the 100% tax applies just this one time to just these people. They would appear to deserve it many times over. But one can never be sure that one isn't creating a precedent with legs. Might the device someday be used against someone else who just happens to be unpopular?

I'd actually like to make an example of these guys - as the French would say, "pour encourager les autres," as well as for general public morale. But I'd prefer a better way of doing it, such as investigating them for looting and fraud, which might have been amply justified even without the bonuses.

The Miami Herald agrees:

Using the tax code as a weapon to exact revenge on a select few, no matter how badly they've behaved, is a horrible idea. Slapping heavy taxes on the bonuses and on the company that issued them may satisfy enraged taxpayers who see incompetent executives being rewarded for failure, but it sets a bad precedent.

It may also violate the constitutional ban against ex post facto laws. More to the point, lawmakers are treating a symptom of the economic crisis and overlooking the root causes of the problem -- unbridled corporate greed and the failure of the regulatory system. There are better ways to channel taxpayers' anger and fix the immediate problem.

Don't make the Tax Code angry. You won't like it if it's angry.