...on the wealthy. It's not unsual for Democrats but almost half of the Republicans (including Minority Whip Eric Cantor) is very surprising.  

House passes bill taxing AIG and other bonuses

...85 fellow Republicans joined 243 Democrats in voting "yes." It was opposed by six Democrats and 87 Republicans.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

http://news.yahoo.com/s/ap/20090319/ap_on_go_co/aig_outrage

So with the 90% fed tax, and whatever state and local (if applicable) whoever got the big bonuses will actually be in the hole. While I agree that the bonuses were a bad idea, taxing the hell out of them isn't. It sets a bad precedent.

Quoting Go3Team (Reply 1): It sets a bad precedent.

How so?

Quoting Go3Team (Reply 1): It sets a bad precedent.

Definitely agreed. Just like the Patriot Act, this bill was a poorly planned knee jerk reaction by government to expand its powers for what it perceives to be the 'public good' without so much as thinking of the long term repercussions.

My company gives its employees bonuses based on overall company performance against objectives... does this mean that the financial incentive to work harder for the company to get a better payout would be for nothing if I made made more than 250K? The government in this financial witch hunt is literally opening precedent to tax success.

The best way to have delt with this distasteful AIG bonus fiasco was to publish the names of all those guys that took bonuses after running the company into the ground. I would be furious if I were a stockholder... it's a wonder that we have heard more from the government on this than we heard from AIG's investors... the victims of this travesty.

Quoting Flybyguy (Reply 3): Just like the Patriot Act, this bill was a poorly planned knee jerk reaction

A knee jerk can be the best response to an attempted rape.   

Quoting Go3Team (Reply 1): It sets a bad precedent.

I also think it might be ruled Unconstitutional. I don't think the government can go after just one small group of people and their bonuses like that. I think the law will be challenged and probably overturned. What would stop the government from next going after bonuses paid to oil executives?

Quoting Flybyguy (Reply 3): My company gives its employees bonuses based on overall company performance against objectives... does this mean that the financial incentive to work harder for the company to get a better payout would be for nothing if I made made more than 250K?

Your bonus is only taxed at 90% if your company received $5billion or more in Gov't money, in which case I don't feel you deserve a bonus.

Just more showmanship and deflection by the Dems to cover their butts on something they should have done long before this.The Democrats were responsible for removing a provision, originally contained in stimulus legislation to ban such bonuses. Pelosi's comment that "we want our money back" is the dumbest ass comment to date. If they had done their jobs to begin with there wouldn't have been any bonuses. Welcome to the U.S.S.A.

Quoting Max550 (Reply 6): Your bonus is only taxed at 90% if your company received $5billion or more in Gov't money, in which case I don't feel you deserve a bonus.

My feelings exactly. Any bonus I've ever received has been based on a percentage of the company's profitability. No profits, no bonus.

Bonuses at AIG are doomed forever. Who's going to want to work for a company where you have no possibility of getting one.

Quoting DXing (Reply 5): I also think it might be ruled Unconstitutional.

Yep, this won't pass constitutional muster. I believe it's called Ex post facto and Bill of Attainder laws.

Quoting Dtw9 (Reply 7): Just more showmanship and deflection by the Dems to cover their butts on something they should have done long before this

And 85 Republicans can't claim against raising taxes. It'll be fun when the Bush tax cuts expires in 2010. A 4% percent increase on the rich pales in comparison to 90%. Good job by the Democratic leadership I say.

It was interesting how the voting went, most Republicans waited on the sideline until they knew that the bill was going to pass and then the flood gate opened and went along with the Democrats.

Quoting Confuscius (Reply 9): Yep, this won't pass constitutional muster. I believe it's called Ex post facto

Ex post facto does not apply to tax codes. See United States vs. Carlton.

Quoting Confuscius (Reply 9): Bill of Attainder laws.

Wouldn't qualify either, as they haven't made the bonuses illegal, they made them subject to extreme tax rates. I'm not saying they won't be challenged, but they will face an uphill battle.

Quoting MUWarriors (Reply 10): Wouldn't qualify either, as they haven't made the bonuses illegal, they made them subject to extreme tax rates. I'm not saying they won't be challenged, but they will face an uphill battle.

At the very least I would say saying that only one group of people is going to be taxed at a higher rate on their bonuses would be discriminatory.

Quoting DXing (Reply 5): I don't think the government can go after just one small group of people and their bonuses like that.

Sure they can. It's THEIR money! And your money. And my money.

Quoting DXing (Reply 5): What would stop the government from next going after bonuses paid to oil executives?

This prevision doesn't apply at all for companies not on government money. Is that company on government money? If so, then sure, they should. If they're getting bonuses for their companies' successes, then hell no! They earned it.

Let me preface my statement my saying I don't have a problem with executives earning bonuses as reflection of their work. In this case, they didn't EARN anything. If their company is in the tank, then they're doing nothing but stealing from the company. Should the prevision have been in there in the first place. Yes, and Dodd had it right, as far as I'm concerned... But I agree with this, these guys shouldn't get a dime. If the company improves, and gets off of the government life support, then what they do with their money is their business. Hell, if their pointed in the right direction, but still on the bailout money, even that's ok with me.

I'm a little bit at odds with the fact that they're doing it after the fact, but this money needs to be regulated, and it shouldn't be going to people who have presided over these problems.

  

Cheers,
Cameron

Quoting Longhornmaniac (Reply 12): Sure they can. It's THEIR money! And your money. And my money.

And it was given to AIG with no provisions stating that that it couldn't be applied to executive bonuses. Would you have a problem if your auto finance company sent you a letter saying as long as you owed them money you couldn't drive the car over 10K miles a year? After you had agreed to the original stipulations on the loan?

Quoting Longhornmaniac (Reply 12): This prevision doesn't apply at all for companies not on government money.

Might as well. They gave AIG the money without the proper strings attached. If they can now go after AIG, they can go after anyone.

Quoting DXing (Reply 13): And it was given to AIG with no provisions stating that that it couldn't be applied to executive bonuses. Would you have a problem if your auto finance company sent you a letter saying as long as you owed them money you couldn't drive the car over 10K miles a year? After you had agreed to the original stipulations on the loan?

I understand your point, but I don't really think that's a fair analogy. One is clearly for one specific thing, and the other one really isn't. Not to mention the fact that one of them makes sense, and the other one really doesn't. But, again, I do understand where you're coming from. Like I said previously, the legislation lacked the necessary attached "strings" to prevent things like this, and that's pretty ridiculous. I'd like to hear the Democrats' reasoning behind taking that out, but the fact is, it most certainly wasn't in the spirit of the "gift." Them going on a vacation (paraphrasing) isn't going to help the company fix the whole host of problems their in. And as the men presiding over it (not saying it's all their fault, but they certainly didn't do their company any favors), they're skating on thin ice, as it were. What have they done to deserve my money? The fact is, they don't deserve ANY money. Not because they're rich and I have some vendetta against the rich people. I mean my family will, in all probability, get hit with the tax hikes Obama is planning on the wealthy. This is about doing what is right. I think it's bad policy as a general rule to go back on things and rewrite the rules, but in this case, I think it's justified. And as long as the government owns 80% of AIG, I think they have a very definite say in how the money should and shouldn't be used.

Quoting DXing (Reply 13): Might as well. They gave AIG the money without the proper strings attached. If they can now go after AIG, they can go after anyone.

Hmm...don't by that one at all. See, the fundamental difference is, AIG opened themselves up to this by getting to where they are in the first place. Again, not all of it can be attributed to "bad business practices," but some certainly can. If the executives at ExxonMobil (to use your example) are making money, then the government can't (and won't) touch it (beyond normal taxes, of course). It's ridiculous to say that just because they're trying to retroactively institute a policy to heavily tax executive bonuses, that they're even thinking about looking at free market profits. The taxing of AIG is a way to control how the GOVERNMENT'S money is being used.

I can't emphasize this enough, though, I agree with you that the the government failed when they failed to put protections against this sort of thing in the first place. And again, ordinarily I'd be against putting something into effect retroactively, but in this case, I see more than enough justification for it. They took advantage of the help they got. Screw 'em.

Cheers,
Cameron

Quoting DXing (Reply 11): At the very least I would say saying that only one group of people is going to be taxed at a higher rate on their bonuses would be discriminatory.

It is discriminatory in the dictionary definition sense, but people getting bonuses don't fall under a group protected by any anti-discrimination law. Also, it is not as though the law says AIG is the only company where the bonuses will be taxed, but any company with an investment of x dollars from the federal government (I believe it needs to be equity investment) will be taxed. I won't be surprised if someone challenges it, but have a feeling they will lose.

Quoting DXing (Reply 13): Might as well. They gave AIG the money without the proper strings attached. If they can now go after AIG, they can go after anyone.

And they always have been able to, the difference is there is no public support for such a tax on profitable companies who played by the rules. There is, however, public support for companies that need a bailout to be taxed at a higher rate.

Quoting Confuscius (Thread starter): but almost half of the Republicans

I have to admit that this is rather amusing...the Republicans voting for the bonus tax, that is, not the whole AIG bonus fiasco. Whoever said that politics is dull?

Quoting Go3Team (Reply 1): While I agree that the bonuses were a bad idea, taxing the hell out of them isn't. It sets a bad precedent.

As amusing as the whole thing is I agree with the statement above. The bonuses were an extremely poor PR move by the company and whether contractually obligated or not they should have known that it would not sit well with the public. At the very least they should have halved the payout or defer them until the company actually posts a profit. But the government dropped the ball when they gave out the TARP funds with no strings attached. IMO the politicians should have asked the execs to return the bonuses voluntarily, if not then reduce any future bailout funds by an amount equal to the bonuses. To legislate retroactively like this does set a dangerous precedent.

Quoting MUWarriors (Reply 10): Wouldn't qualify either, as they haven't made the bonuses illegal, they made them subject to extreme tax rates. I'm not saying they won't be challenged, but they will face an uphill battle.

Yup, it doesn't meet the strict definition of Bill of Attainder, but since the bill is clearly punitive in nature, who knows what a court may say. My greater concern is that in order to be completely clear of the constitutional question, the Congress can word the bill to include any bonus to anyone from any corporation. That will pass constitutional muster and open us up to further taxation.

I'm not a conspiracy theorist, but this Congress and this President are meddling way too deeply into our free market and how our political and economic system works. On the surface and taken individually, the actions taken may seem innocuous (sp?), but taken in total...I see some ominous changes on the horizon.

Just 592 days until we can start to right this wrong. Hopefully the damage is reversible.

I just saw where a large portion of these bonuses went to their London office. If these are UK citizens getting bonuses, good luck getting taxes out of them. edit because I fogot to include the link.....

http://www.guardian.co.uk/business/2...9/mar/16/fury-at-aig-staff-payouts

The crisis-stricken insurer AIG has infuriated the Obama administration by paying "retention" bonuses of $450m (£322m) to staff at the London-run financial products division that crippled the company with vast losses on toxic derivatives.

[Edited 2009-03-21 18:49:14]

Quoting Fr8mech (Reply 17): but this Congress and this President are meddling way too deeply into our free market

I'm not a big fan of the current Congress but I have to bring in some perspective to your argument. Don't forget that it was the previous administration who pushed the TARP bailout to the banks as well as the government-backed loans for the automakers, thus starting this "meddling" that you talk about. Furthermore the companies who benefited from the public funds had the option of closing their doors and not take the money...to date only Ford stands out as having publicly declined any tax funded loans.

In my book if you, as a public company, decide to accept public funds in order to survive then you have to accept some "meddling" by the government. Bush and the previous Democratic Congress (much to my disappointment) opened the door but lets not forget that for every taxpayer dollar that the federal government handed out there was a willing taker in the "free" market. Lets try and keep some perspective and not let partisan views distort reality.

Quoting Fr8mech (Reply 17): Just 592 days until we can start to right this wrong. Hopefully the damage is reversible.

I wish I shared your optimism but with our current 2-party system our choices are limited to the bad or the ugly. I certainly wasn't terribly impressed by the Republicans when they were in control of Congress as they showed the same appetite for spending as the current Democrats do. Unless a strong third party comes along voting for the Republicans in 2010 would be like switching to a similar shirt in a different color.

Quoting DXing (Reply 18): If these are UK citizens getting bonuses, good luck getting taxes out of them.

The plot thickens as they say! That money is as good as gone. I say just deduct the amount from the next (inevitable) AIG bailout if you really want to punish them (though I still stand on my comment that it was the government who dropped the ball on this one by giving out the TARP w/o strings).