Tax on retention bonus
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Okay. So everybody is trying to make their own points. Fair enough.
Just pay the TARP money back. Why are all these firms who claim they didn’t need the money, say they’ll be able to give it back sometime in 2010? Where did it go?
The firms are bankrupt. Simple as that. And were it not for the TARP, there would be no bonuses, no money to pay them. If you care to make the slippery slope argument about whether or not your 401k balances are next up for grabs, that’s an enormous stretch. Is government stupid? Yup. Are these big money center banks stupid? Uh huh. So don’t be surprised when these two megadumb institutions climb into bed together, and start hating themselves in the morning. And if you work for one of these firms and know you can make more money elsewhere with less headaches–DO IT.
This has a been one of the most fascinating threads in a long time. I am wondering is anyone pointing the finger at our industry besides me and Bodysurf?
Pay back the money and the bonus the sh*t out of each other in any way you want. Make sure you give the CEO's an appropriate amount for tennant improvements!"If you care to make the slippery slope argument about whether or not your 401k balances are next up for grabs, that’s an enormous stretch. "
That's not the point that I'm trying to make. The point is that if the argument is that the Government can take one's pay because the taxpayers are footing the bill, nobody is safe because everyone gets money from the government.[quote=footsoldier]This has a been one of the most fascinating threads in a long time. I am wondering is anyone pointing the finger at our industry besides me and Bodysurf?
Pay back the money and the bonus the sh*t out of each other in any way you want. Make sure you give the CEO's an appropriate amount for tennant improvements![/quote] The industry deserves lots of blame. However, that has nothing to do with this thread. This thread is about our government retroactively taking the money that people have earned. The government could have said, "We will give you these bailouts and in exchange we will need to change the compensation structure." They didn't do that. Instead, the government said, "We will give you these bailouts and we will let you keep the compensation structure." They then, after the fact, said, "We change our mind. It's in our best political interest to confiscate the money that you have been paid. Too bad. So sad."Obama is not going to sign this tax bill. Aig will renogiate with their employees, and give him cover. The congress has already generated all the sound bytes they needed. Obama needs to show maturity, and this is a way for him to do it. The economy doesn’t come back til the bank stocks come back, and he knows it.
Come on. At least give Congress some credit for having an ear to the ground, and able to gauge the sentiments of their constituents back home. The bill passed overwhelmingly; if Obama doesn’t sign it, they’ll override him. He will, though. And if the guys at AIG or Citi run to find lawyers to challenge the law, they’d better hope it isn’t a jury trial.
Nobody’s saying you can’t make a million dollars worth of commissions. But–for the umpteenth time now–if your biggest shareholder and biggest bondholder is the same entity, don’t be surprised if he wants a say in how much your people are paid. Pay back the TARP, and Barney Frank and Barack Obama go away. Hope I’m not going too fast for anybody.
But they can’t. They’re broke. Up to me, we would bankrupt them and start all over. Guess what their bonuses would be then?
Bodysurf, I think that we are all going to fast for you. It's not a question as to whether people should be getting bonuses. The biggest shareholder and biggest bondholder should have a say in compensation.
The biggest shareholder and biggest bondholder should not be able to say, "We'll give you a big bonus" and then after giving the bonus say, "Ok, now you have to give the bonus back to us." If they were to bankrupt them, the employees could choose whether to work or not work knowing that they were not getting bonuses. Instead, the employees made life decisions based upon the fact that they knew that they were getting the bonuses.yep you are going a little fast for me…would not be a jury trial, juries decide facts, they don’t interpret laws. If the govt wants to use their ownership to deny bonuses, that is one thing, but to pass a tax is unfair and I hope, illegal. What’s next? A 90% tax on all doctors who won’t perform abortions? How about a 90% tax on everybody that works at Phillip morris that makes over 250k a year? How about taxing anybody that works at a company that gets govt contracts and makes over 250k a year? Given all the earmarks in the stimulus bill, anybody who thinks congress is the stewards of taxpayer money is an idiot.
Obama will not sign this bill, too many unintended consequences. Do you really think that every big bank in the country was that poorly managed, or do you think there might have been a problem with the system? Congress's hands are not clean. Bankruptcy at these firms wouldn't hurt their top employees much other then the stock they own. Their top bankers/traders and analysts would get paid to work someplace else, just like you would get paid to work someplace else if your firm went bankrupt. It is the taxpayer that will get screwed if these banks go under, after all, they own the stock. The banks capital problems are the result of marking illiquid assets to a market that doesn't exist. If you bankrupt the countries biggest banks, who is going to buy these assets? Do you suggest selling these assets to the vulture funds at pennies on the dollar? If that were to happen, the securitization market for student loans/ credit cards/ home equity loans etc would never come back. These assets are always going to perform the worst in an economic down turn, and no firm that is subject to marking their portfolio would ever touch those again. The cost to consumer would be enormous, especially to the poor. The govt would have to permenantly start subsidizing these asset to provide affordable credit to the poor. The lehman bankruptcy was the catalyst that sent our economy over the edge, no way will they let that happen again.“Obama will not sign this bill, too many unintended consequences.”
I hope that you are correct, but I doubt it.[quote=anonymous]“Obama will not sign this bill, too many unintended consequences.”
I hope that you are correct, but I doubt it.[/quote]Be interesting what the Republicans in the Senate does. One one hand, they have to votes to either kill this or keep it from getting 60 votes, and that's what they would like to do. On the other hand, politically they'd rather put Obama on the spot.
http://www.foxnews.com/politics/first100days/2009/03/22/administration-changes-needed-percent-tax-aig-bonuses/
He won't sign the bill.I believe that the courts may find that a tax law that is retro-active may be unconstitutional. If not this would set a terrible precedence. I think that it is sinful that the bonuses were paid with tax-payer money, but our congress and administration should have taken steps to prevent it by making a stipulation that bonuses, trips, planes etc. would not be allowable if TARP money was accepted by a company. Our country’s corporate culture is morally as well as financially bankrupt, and congress is just as bad or worse.
[quote=mnbondguy]
http://www.foxnews.com/politics/first100days/2009/03/22/administration-changes-needed-percent-tax-aig-bonuses/
He won't sign the bill. [/quote] He is doing many things people thought he wouldn't and he said he wouldn't do. I have no faith in the man.[quote=anonymous]
Bodysurf, I think that we are all going to fast for you. It’s not a question as to whether people should be getting bonuses. The biggest shareholder and biggest bondholder should have a say in compensation.
The biggest shareholder and biggest bondholder should not be able to say, "We'll give you a big bonus" and then after giving the bonus say, "Ok, now you have to give the bonus back to us." If they were to bankrupt them, the employees could choose whether to work or not work knowing that they were not getting bonuses. Instead, the employees made life decisions based upon the fact that they knew that they were getting the bonuses.[/quote]You are missing the point. If Obama signs this it sets and extremely bad precedent, and people in the financial business...perhaps throughout the business world...will think twice before they trust the government to keep its word regarding ANYTHING.
I hate the fact that these guys got these ridiculuous bonuses, but this "tax act" amounts to outright confiscation.
What’s the difference between a contractually required bonus and salary? The primary answer is nothing. These bonuses were promised and paid because that was what was felt was needed to be done to attract and retain top people. If it is so important that AIG was allowed to survive as a company, I think that it would have some importance that the compensation be structured in such a way that they get the employees that they want. Hundreds of billions of dollars are at stake and we are worried about $160 million? It makes no sense. What would have happened if they knew that they were going to confiscate these bonuses is that AIG would have had to structure the pay as salary and not bonuses.
Well, I know there have been times where the highes marginal income tax bracket was over 90%. We know that's not the same as being taxed 90% on dollar one, but if you don't think QP withdrawals can be taxed at a much higher rate than they are now, you're the one who's grasping for straws.If you care to make the slippery slope argument about whether or not your 401k balances are next up for grabs, that’s an enormous stretch.
There are all kinds of retroactive laws. Congress can meet at any time and say that the tax rate for 2009 will be 50%, and that number applies to everything you’ve made from January 1 until now.
I take the back seat to nobody when it comes to my sheer disgust at this Congress, so please don’t misunderstand me. But neither should anyone be surprised by them. And when you go to Washington and tell them that you’re bankrupt unless they start kiting a whole lot of checks your way, they’re going to have a say as to how much your execs are going to be paid. These banks were their own worst enemy, and still are. It would be wrong to let a little righteous indignation about the dumbasses inside the Beltway get in the way of realizing that these banks are bankrupt. They’re gone. And EVERYBODY on the payrolls there are there by virtue of the same crooked Congress they now decry.
The problem is that he’s not going to stop with capping salaries on just AIG or anyone else who took TARP money. He’s going to pass it on to anyone who makes over what he deems too much. Anyone catch the comment he made about corporate salaries and that those people need to move outside of NY to someplace like ND, AR, or IA where people would be happy to make $75K a year? Since when is it the POTUS’s job to even think about what is going on in a public business. It’s not illegal to pay execs $1 mil a year. It’s not illegal to give them stock options or deferred comp or company cars. Why the does anyone in Washington feel they have the right to dictate what ANYONE makes?
It's pretty obvious to me that he's never really been in AR or ND or IA. He doesn't know how much some of those big farmers make. Or that Wal-Mart's headquarters is in AR. Or that from a cost of living viewpoint those folks who work in Des Moines probably make as much as those folks in NYC. When you're paying a couple thousand a month for a little efficiency apartment in Manhattan a $100K a year pencil pusher job doesn't really mean that much. Here in my neck of the woods I've got a client who will sell you an acre of good farmland for about $5K. It's all relative.