90 % tax on AIG bonuses

[Dan D]

http://www.boingboing.net/2009/03/19...-aig-bonu.html
"The House of Reps [US]has a solution to those crazy AIG bonuses: a new tax that will claw back 90 percent of the income of anyone paid more than $250,000 by any firm that got more than $5 billion in bailout money."

Brilliant idea! My proposal would have been to give them some of these junk securities as bonuses.

[SteamWake]

"Those crazy AIG Bonusus".... LOL

Look this 90% tax smacks of socalist russia in the 60's. Indeed their dissapointed they werent able to tax at 100%. It just opens the gates.

The dumb asses in the federal goverment put the bonuses in there in the first place, then they feign outrage at the bonuses, then they cry "give them back!" then duck and weave when a small portion of the american public find out what a bunch of sniveling hypocrats they are.

No this is not a good thing no matter how much it satisfies your need to stick it to the man.

Look into this a little deeper, there is more to this story than the evening news will tell you.

'give back the tax money' pffft as if we will ever see one red cent.

[Tchocky]

Stupid.

Better to introduce legislation on pay that is to be contracted in 2009, rather than invalidating contracts that have already been signed. The contracts may not have been a good idea, the pay policy in high-level financial services may be in dire need of reform, but it's better to legislate for present and future events, rather than pre-existing agreements.

Very dodgy precedent to set here. I'm more than a little amazed at the attention that has been paid to these bonuses, given the miniscule proportion of money they represent.

This 90% tax smacks of socalist russia in the 60's.

Or the USA in the 60's.

91%


http://74.125.47.132/search?q=cache:...&ct=clnk&gl=uk

[SteamWake]

Originally Posted by Tchocky

I'm more than a little amazed at the attention that has been paid to these bonuses, given the miniscule proportion of money they represent.

It has achieved its intended purpose, dont take your eye off the ball. Where did the rest of that tax money go? Foriegen banks, Hedge Funds, and on and on.

Here is a freaky example

http://www.deadlinehollywooddaily.co...ollywood-toon/

[Dan D]

What I don't understand is why are bonuses paid when the company does not realise any profit or even worse when the company would have gone bankrupt without government help.

From what do you want to pay bonuses if there is no profit?

And imo it makes sense that companies that have received bail out money should not pay bonuses to their managers.

"No profit, no bonus" should have been written into these bonus contracts, imo.

But I am no expert, so please enlighten me.

[UnderseaLcpl]

Originally Posted by Dan D

What I don't understand is why are bonuses paid when the company does not realise any profit or even worse when the company would have gone bankrupt without government help.

From what do you want to pay bonuses if there is no profit?

And imo it makes sense that companies that have received bail out money should not pay bonuses to their managers.

"No profit, no bonus" should have been written into these bonus contracts, imo.

But I am no expert, so please enlighten me.

Most of America's crappier-run corporations do not pay executive bonuses on net profit. One popular alternative is whether or not they beat Wall Street's quarterly predictions. Of course, this leads to some questionable business strategies, such as unwarranted mergers and accquisitions, excessive downsizing, and book-cooking. It is no coincidence that most executive compensation is in the form of stock options.
Of course, there are other methods, but compensation standards are often set by the board, so the fox is guarding the henhouse.

Nothing wrong with that, though. Such companies will eventually run themselves into the ground, anyway. The problem comes in the form of competition-stifling regulation and taxes, and in this case, bailouts.

A bit OT, but consider this;
All business is driven by the motivation for profit. That's the incentive. In a healthy free-market economy, there is only one way to profit, and that is to be competitive. In an increasingly socialist economy like ours, that incentive is diluted. The state hinders the creation of new ventures and solidifies the position of established companies. Think about it. It is very difficult for a new venture capitalist to amass the capital required to meet all regulatory and legal standards, and often they are made to wait months or years for approval. All that time and capital is effectively wasted. That's part of what makes so many small businesses fail. They're out of business before they even start.
It's no wonder that the most prominent lobbyists for regulation of commerce and industry are commerce and industry. They're trying to shut out the competition.

In the case of the bailouts, we're just skipping the process of established business worming its' way into legislated superiority. The fox guards the fox who guards the henhouse, so to speak. It creates an automatic monopoly. Sure, there may be many financial institutions, but will all be run by the government. You'll understand if I'm not enthralled at that prospect. Unlike the free market, the federal government does everything poorly, becuase it has no competition. And even worse, you have less choice in the matter.


What you are seeing now is what happens when business and the state have common interests. These kinds of companies are allowed to survive, and even helped with taxpayer funds. The results are quite predictable.
Of course, this has been going on for decades now, but not since the 30's has the state intervened on such a grand scale.

[AVGWarhawk]

Welcome to the world of GREED. Such utter nonsense that anyone would seriously let this slide. It is utter nonsense that Washington is stupid enough to write this crap into the rules of receiving Fed funding. Utterly stupid that Washington points the finger at everyone but themselves. Washington is run by blooming idiots....period.

Where are the Obama supporters? Do you hear crickets Strangly absent when the stupidity hits the fan. This is just the tip of the stupidity. More to follow.

[jumpy]

Dunno about the US, but in the UK it doesn't seem right that certain banks here who have begged for and received large sums of taxpayers money to shore up the consequences of blatant profiteering, are now using some of that money intended to cover their bad debts, to pay staff bonuses. Staff who have presided over losses.
Regardless of what 'contracts' were in place before, taxpayers money should not be used for that. An honest company ought at least to consider the idea of freezing bonuses until it is no longer reliant on taxpayers bailouts. To an outsider it just looks plain greedy. It really ought not to be left to a government to impose tax levies on bonuses. Given the state of some of these companies I'd have thought they'd be inclined to organise themselves better in that respect; but I guess that's not how business works.
Apart from anything else it looks like no matter what you do in these particular industries, be it a sterling job or an utter shambles, you still get the payout, regardless of success or not.

I know several companies I have worked for in the past have tried to persuade staff to take pay cuts when times were bad and yet when things picked up again there was very little in the way of reinstating salaries to their original level. And when that doesn't work, they make people redundant
All aboard the gravy train!

It all looks very messy to me, but perhaps that's the idea?

[Digital_Trucker]

Originally Posted by Dan D

What I don't understand is why are bonuses paid when the company does not realise any profit or even worse when the company would have gone bankrupt without government help.

From what do you want to pay bonuses if there is no profit?

And imo it makes sense that companies that have received bail out money should not pay bonuses to their managers.

"No profit, no bonus" should have been written into these bonus contracts, imo.

But I am no expert, so please enlighten me.

The AIG bonuses in question were contracted over 2 years ago. The reason they were contracted that way was because our all-omniscient government felt it necessary to limit bonuses, causing a whole new cottage industry of lawyers who do nothing but figure out how to structure bonuses that meet the federal guidelines, yet still reward "productive" executives.

Whether AIG was profitable 2 years ago, I don't know, but I would be willing to bet they were.


There were stipulations in the original draft of the bailouts that would have taxed these bonuses at something like 60%, but, for some reason, a member of a party not to be named because they control the entire country at the moment decided to remove or greatly restrict the taxation on these bonuses.

This current "outrage" and claiming not to be aware of these bonuses is merely another "smoke and mirrors" trick to make the average citizen think that the great and wonderful government is looking out for our "best interests".

[AVGWarhawk]

This current "outrage" and claiming not to be aware of these bonuses is merely another "smoke and mirrors" trick to make the average citizen think that the great and wonderful government is looking out for our "best interests".

I agree with this statement lock, stock and barrel. Welcome to the new world, the world of protecting Obama for anything that reduces the polish the Dems spent polishing for years concerning Obama.

I really enjoyed his 'Special Olympic' comment concerning his bowling skills. That wise crask was totally uncalled for. He is like a teenager with his first beer. Gaffer Joe has some competition.

[SUBMAN1]

This is an illegal law Congress passed and now it will just waste the Supreme Courts time. Unfair tax like this is specifically called out in our Constitution and Congress has no authority to pass a tax like this.

What will happen is one of these bonus receivers will simply refuse to pay it, and they will be in the right by not paying it. Then it will mushroom from there.

-S

PS. If this were allowed, you just opened the floodgates to tax any undesirable group that Congress wants to get rid of. This rings about as draconian as Hitler.

[Digital_Trucker]

Originally Posted by AVGWarhawk

I agree with this statement lock, stock and barrel. Welcome to the new world, the world of protecting Obama for anything that reduces the polish the Dems spent polishing for years concerning Obama.

I really enjoyed his 'Special Olympic' comment concerning his bowling skills. That wise crask was totally uncalled for. He is like a teenager with his first beer. Gaffer Joe has some competition.

I read earlier today that he did call and apologize to the head of the Special Olympics after the taping of the show and before it aired as he was flying off into the sunset in Air Force 1. I'm sure one of his people who can think without a teleprompter told him it wasn't a good idea. He supposedly wants to have some Special Olympians over for bowling. I hope they beat the crap out of him (on the bowling lanes, anyway).

[AVGWarhawk]

A special message from Obama's teleprompter:

[Digital_Trucker]

Originally Posted by AVGWarhawk

A special message from Obama's teleprompter:

:har ::rotfl:

[AVGWarhawk]

Good stuff. I like the part about having two hot Imacs in the bus