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The TARP bonus confiscation: a modest amendment

March 20, 2009

Sure, the TARP penalty tax passed yesterday by the House of Representatives is insane. But hey, when Congress passes a lemon, we might as well make some lemonade. In that spirit, the Tax Update proposes a rewrite to Section (d) of the bill passed yesterday. I'm sure a real lawyer-lobbyist could tidy up the wording; feel free to make suggestions in the comments.

My language is below the fold. It would subject all income earned by lobbyist-spouses of Congresscritters to the 90% special tax on the same terms as TARP bonuses. Same goes for money earned in cushy jobs by Congresskids employed by lobbying firms, money-sucking non-profits, or government contractors. And any Congressman who votes a farm subsidy that benefits his farm back home, or his brother's farm, will be able to do so in good conscience, knowing that the IRS will take it all back.

Fair's fair; Congress has caused far more damage to the economy than the TARP-company executives. Surely they're willing to be held to the same standards.

UPDATE: Similar thoughts from an actual lawprof.

(d) OTHER DEFINITIONS.

(1) —Terms used in this section 
which are also used in the Internal Revenue Code of
1986 shall have the same meaning when used in this 
section as when used in such Code.

(2) For purposes of this Section, all members of Congress,
and all persons bearing a relationship to such members
under Code Sec. 267(c)(4), shall be considered employees 
or former employers of a covered TARP recipient.

(3) The following payments shall be treated as payments 
described in Subsection (b)(2) of this section (whether 
paid in cash or in kind):

(i) Payments of taxable compensation from any person who 
received payments under contracts with any branch of the 
federal government since December 31, 2004;

(ii) Payments of taxable compensation received as a 
registered lobbyist;

(iii) Payments of compensation from from any person who 
employs a registered lobbyist;

(iv) Any payments under any price support, conservation 
or other direct payment program administered by the 
Department of Agriculture.

(v) Any payment received from any person who contributed
to the campaign of such member of Congress.

Tags: TARP.TARP tax.

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