Statement by Congressman Tom McClintock Regarding HR 1586
March 19, 2009. HR 1586 would tax 90 percent of the bonuses that push an executive’s earnings above $250,000 IF his company has received more than $5 billion in federal bailout funds.
I reluctantly supported HR 1586 for a simple and singular reason: it will stop or slow the corporate bailouts that are bankrupting our country.
Until HR 1586, there has been no downside for the executives who persuaded Congress to hand them the keys to our nation’s treasury and who are now plundering it with impunity. This measure takes away the personal profit for the executives who are doing so. In addition, since the bill would not apply to any corporation that returns its bailout windfall, I believe it will be a powerful incentive for companies immediately to repay the funds that Congress should never have authorized in the first place.
I do not believe the act qualifies as a bill of attainder, as some have suggested. The measure applies to any recipients of TARP money, making no distinctions among them, in the same manner as the tax code applies separate tax treatments under a wide array of circumstances.
Nor do I believe this is a tax increase in any conventional sense since it seeks solely to recover tax revenues that are being spent for purposes other than Congress approved.
I abhor a number of aspects of this bill, starting with the fact that it is necessary at all. I believe the government bailout of failed companies is prolonging and deepening our recession and for that reason I have opposed this policy every step of the way. The only justification for this bill is that it will greatly reduce the number of companies seeking or holding government bailout subsidies.
I am also deeply concerned with the use of the tax code for purposes other than generating revenue. It is a dangerous precedent justified only by the dangerous precedent of the bailouts themselves.
I will vigorously oppose any legislation seeking to interfere with compensation decisions made by private companies with private funds. But once a company has accepted government bailout funds and begins operating with public capital, it has also invited public oversight of its decisions. And that never ends well.