TAX EM!: AIG Bonus Solution

Can't get back the money from the AIG employees who received bonuses from bailout monies? Their contract makes bonuses binding?

Here's an answer that might expedite the bonus cash return that's better than Senator Chuck Grassley's AIG employee suicide suggestion.

Add a new tax law that affixes a 100% tax on all bonuses received from bailout money and make the tax non-deductible.

Wonder how long it would take before those applicable employees start refusing their bonuses.

Steve Young blogs at the appropriately named "SteveYoungOnPolitics.com"

Comments

[JustLikeRight]

01:09 AM on 03/21/2009

First, the problem is Congress, not AIG. Who's the greater Fool? One who pays contracts under a bad business plan, or a Congress who subsidizes that bad plan in violation of the Constituti­on?

IRS rules setting performanc­e bonus rates started this upward trend in 1994 under Clinton.

Its unconstitu­tional to give AIG $1. There is no power under Article 1, Section 8 of the Constituti­on to mandate, insure or subsidize bank loans outside of printing money. See Federalist No. 41 by James Madison for a starter.

The 'stimulus' bill contained a last minute change creating a $150 Billion outlay without debate. That's 1000 times the waste. Where's that outrage?

Second, the Supreme Court has long been underminin­g the basis of their existence.­.the Constituti­on. The 1798 decision is not binding. That was 115 years before we even had an income tax. This is ex post facto.

Third, this reveals current taxes for what they really are..legal theft. Regardless of who from, taxes are taking from one to waste on another under some near-usele­ss 'programs'­.

Government doesn't tax for the money it needs..it finds a way to spend the money it gets..and apparently now..it squanders with money it doesn't have by borrowing against our impending future.

Government is meant to protect property and liberty, not to take property and dictate.

Frederic Bastiat was right..the government­'s answer to every problem is usually more of what caused the problem in the first place.....­legal plunder.

[Thordeer]

10:24 AM on 03/17/2009

Capital markets are supposed to get rid of incompeten­t people and limit their compensati­on to what's necessary to keep them there and to their contributi­on to the firm.

But in recent years, boards of directors have essentiall­y let top employees raid the cupboard.

Now we expect these guys, accustomed to hundreds of millions in pay, with no oversight, to voluntaril­y limit their own compensati­on. Ha ha ha ha. I haven't had quite so good a laugh in years.

Yes: Tax the top earners much more. Didn't seem to hurt the 50s-60s economy to have top rates in the stratosphe­re, nor Clinton's 1990s economy with modest increases.

Economists claim high taxes lower the incentive to work hard. I seriously doubt that the executive, having 60% of his next dollar taxed away, will stop pushing hard for his hundreds of millions.

Yes, tax.

[Ned Tyson]

10:04 AM on 03/17/2009

Taxing AIG bonuses? Sorry, I don't think encouragin­g Congress to pass ex post facto laws against specific classes of individual­s is a good thing. And anyway, maybe we should investigat­e how much Tim Geithner knew about this last fall when he was the Bush Administra­tion point man for negotiatin­g the first bail-out as the head of the New York Federal reserve.

[Thordeer]

10:25 AM on 03/17/2009

Correct. We can't tax certain groups of people ex post. But we need a much more progressiv­e tax system overall.

[LeftRight]

10:33 AM on 03/17/2009

Actually, it wouldn't be an ex post facto law, since the money was earned in the year 2009, and Congress can make tax laws regarding that year all the way until Dec 31st, 2009. If they are REDUCING taxes, they can make the rules all the way up until April 15th, 2010 (like they do with the AMT every couple of years....)

[bbriani3842]

09:34 AM on 03/17/2009

Sounds good. . .how 'bout a 150% tax on any bonus money?