Tax on retention bonus
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WASHINGTON (AP) – The House is scheduled to vote today on a bill that
would levy a 90 percent tax on bonuses paid to employees with family
incomes above $250,000 at companies that have received at least $5
billion in government bailout money.
Didn’t C and BAC both get over $5 billion in bailout money? Will the retention bonuses paid to bac-merrill and citi-smith
barney reps be Fed taxed at 90%?
That is the dumbest freakin thing I have seen them do yet. First of all, why is it that people that make under 250K are somehow special? What if you make 85K and your wife makes 200K, now YOU have to get penalized for your bonus? What if you took the job with the explicit understanding that the bonus was the primary reason you took the job?
This is absolutely ludicrous. They are not punishing "corporate executives" or the people that got us into the mess (otherwise, every Senator would have their entire SALARIES taxed at 90%), they are punishing good, hard-working people, that may happen to earn a lot of money. Here we go again.....wealth re-distribution. "F" all of you that make too much money. When we elected Obama, even the most conservative people couldn't have imagined a 90% income tax....but we got what we (not me) voted for.my biggest beef with the whole $250K mark is that it is not a given that someone earning $250K is anywhere near “rich.” that $ amount in iowa/wisconsin is nowhere near the same value for someone living in larger metropolitan areas like nyc/chicago.
the worst part of this IDIOCY is that there are good people at each of these companies that had nothing to do with the downfall. who went about their daily business in the proper fashion, and work hard to put food on the table just like everyone else in this country. they count on this money to live and provide just like the welfare mom counts on her stamps to do the same.
why are these people being punished? just remember, if this administration can do it to these people... don't think it has not (or will not) cross their minds to do it to others in the private sector. all they need is a political reason.they count on this money to live and provide just like the welfare mom counts on her stamps to do the same.
Val- I want some of whatever your smokin dude. Give me a flippin break equating someone who gets a 1M bonus to a welfare mom. Xanax will help bring you back to reality...Why are these people being punished? Because congress doesn’t understand the concept of bonuses. They get paid regardless of how they perform. If they were paid by way of a bonus package not only would they not make any money, they’d have to pay us.
As Will Rogers said "Thank god we're not getting all the government we're paying for."[quote=footsoldier]they count on this money to live and provide just like the welfare mom counts on her stamps to do the same.
Val- I want some of whatever your smokin dude. Give me a flippin break equating someone who gets a 1M bonus to a welfare mom. Xanax will help bring you back to reality... [/quote] i knew this would surface - the point is not a dollar to dollar comparison, rather that everyone has their own standard of living that is built into their income and what that income will provide for their families. is a $1 million dollar bonus outrageous for those persons who ruined their company and facilitated this economic meltdown - absolutely. but not everyone who got that $1 million OR whose "family income is over $250k" (and did not get a $1 million bonus) was part of that circle of people. they are unjustifiably being punished IMHO - 90%!!!!! this entire scenario is exactly why our government has NO business running businesses.F*%^ Obama and everyone who voted for him. $250k isn’t enough to make a god damn mortgage payment anywhere around me. I think he should pay 90% taxes on the “forgiven” rent he’s getting while living in the White House and on everything over $100k he makes.
It’s too late to debate the bonuses for companies that receive government assistance. How anyone can justify a bonus (not wages) to an employee when the ship is ready to sink just doesn’t pass the smell test and never will.
Bonuses are generally not guaranteed are they? If they are maybe they shouldn't be. Your argument about government intervention is completely valid, except for one minor issue. They needed the money in order to continue and NO ONE was willing to lend them a dime more. I agree our govermnent shouldn't be running business, and I also believe that allowing these firms to go bankrupt would have been a better scenario over the long haul. The problem is that no one wanted to give the market time to correct itself. It has been too painful for many already. So we reap what we sow and now we have to deal with the aftermath....and it isn't a pretty picture as you describe. Let's not forget what caused us to go into this quagmire.If I read correctly some of the bonuses went to folks who had already left AIG. Is this not insane? Where is my Makers Mark...and ice...
Foot, your argument is flawed. If your argument were true, then why not just stop paying everyone at AIG? And at BAC? and at C? What’s the difference between the contractual bonuses they were offered before TARP, and their salaries? It’s all compensation. TARP money was meant to keep the companies solvent. Part of running the companies is paying them what they agreed to pay them.
I don't know who you operate through, but let's just say LPL for argument's sake. What if the government came out tomorrow and said that getting an 80% payout on commissions is unacceptable. In fact, anything paid out over 50% will be taxed at 90%. And it's retroactive back to all of 2008. But just at LPL. And RJ. And Commonwealth. They are not trying to take back the bonuses because these people got paid. They are doing it to try to prove to the American people that they are in control of the situation. And not doing a very good job of it.So, if you performed a job and, did it well, from 2006-2007, then in Jan 2008 you were given a contract that said because of your performance we’re giving you your million dollar bonus payable in 1 year (whether you’re here or not because it’s based on the year prior), why the hell should you not be entitled to take that bonus? Why should the weight of the firm’s failure rest on your shoulders. Are you the one at fault? Likely not. Should your family suffer because someone else screwed up (by the way, those people that did screw up got plenty of bonuses and didn’t have to wait a year for them).
***I’m just speaking hypothetically here. I’m sure someone the people who got these bonuses screwed up the company and some did not. But let’s be realistic.
I just read that some forms of the bill will levy the tax half on the company, and half on the individual. Isn't ultimately like we are charging ourselves for those bonuses?
-Government sends money to AIG from taxpayers -AIG sends money to employees in form of bonuses -Government then asks for a large portion of money that go out in bonuses to be taxed -AIG doesn't have the money, otherwise government wouldn't be sending taxpayer money. AIG uses taxpayer money to pay back tax payers. I hope I am wrong or unsophisticated with this. Otherwise, I think it is pretty awesome.[quote=B24] Foot, your argument is flawed. If your argument were true, then why not just stop paying everyone at AIG? And at BAC? and at C? What’s the difference between the contractual bonuses they were offered before TARP, and their salaries? It’s all compensation. TARP money was meant to keep the companies solvent. Part of running the companies is paying them what they agreed to pay them.
I don’t know who you operate through, but let’s just say LPL for argument’s sake. What if the government came out tomorrow and said that getting an 80% payout on commissions is unacceptable. In fact, anything paid out over 50% will be taxed at 90%. And it’s retroactive back to all of 2008. But just at LPL. And RJ. And Commonwealth.
They are not trying to take back the bonuses because these people got paid. They are doing it to try to prove to the American people that they are in control of the situation. And not doing a very good job of it.[/quote]
Nicely worded B24.
I am not sure that you can surmise that anyone did their job well in 06-08 if the company ran itself into the ground. If they were doing that well why not pay the gov back and pay their bonuses out of profits. Oops there weren’t any because they strayed into territory with great risk associated and lost. Maybe we are closer to the same side, but I just can’t get my hands around paying a bonus of a dollar, if the company is bleeding.
Again...pay a bonus for performance i.e., the company earned x therefore we are paying you y. But if you defer it to a different year and the company is now not profitable....there in lies the problem ,no money to pay the obligation. Maybe bonuses should be treated like deferred comp. The public at large can't and probably won't ever accept this practice. It comes back to the smell test.[quote=footsoldier]I am not sure that you can surmise that anyone did their job well in 06-08 if the company ran itself into the ground. If they were doing that well why not pay the gov back and pay their bonuses out of profits. Oops there weren’t any because they strayed into territory with great risk associated and lost. Maybe we are closer to the same side, but I just can’t get my hands around paying a bonus of a dollar, if the company is bleeding.
Again...pay a bonus for performance i.e., the company earned x therefore we are paying you y. But if you defer it to a different year and the company is now not profitable....there in lies the problem ,no money to pay the obligation. Maybe bonuses should be treated like deferred comp. The public at large can't and probably won't ever accept this practice. It comes back to the smell test. [/quote] Foot, AIG has many divisions so let's just take this example - you are a manager in the life/health division, said division had nothing to do with the deritives/CDS's, etc, that ultimately got AIG, as a company, in trouble. under your leadership, the life/health division prospered, thus you were to be given a contractually oblligated bonus. are you telling me that you would not expect your bonus "because the company ran itself into the ground", but was bailed out by Uncle Sam to the tune of $170 Billion? I think most in that scenario would expect that bonus as contractually obligated exactly BECAUSE of your performance(although I agree with you that bonuses moving forward may need to be restructured). Bankruptcy would have solved all of this, but NOOOOOOO, our wondeful politicians, in the heat of a Presidential election year just could not resist. Regarding your other post, I agree with most everything you stated there. Hopefully your Makers is in the sameplace as my Woodford Reserve - at home, in the bar, awaiting my arrival.What about the Merrill,SB, and MS brokers who have already spent their bonuses…and does this mean everyone goes to UBS and Janney for the "recruitment bonus???
I told you we agree more than disagree...
Now if Geithner would resign maybe we can at least have someone running treasury who pays his taxes on time. Why does my nose turn up so often? Another test where the shnoz twitches.Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![quote=Valhalla]Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![/quote] I assume you're referring to the "bill of attainder," as in: A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution. Good call, that's exactly what it is.[quote=now_indy][quote=Valhalla]Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![/quote] I assume you're referring to the "bill of attainder," as in: A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution. Good call, that's exactly what it is. [/quote]Yeah the Demorats really believe in the US Constitution