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      03-19-2009, 06:21 PM   #1
johnnymu
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House Passes 90% Bonus tax bill today

Well the House just passed a bill asking AIG to return 90% of the 165 million dollar bonuses http://finance.yahoo.com/news/House-...-14695846.html. The question is why only 90%? why not get it all back? The treasury of secretary has the ability but why only 90%? Is this why Senator Chris Dodd made the last minute addition on the stimulus package? Is our Politician really thinking for the American taxpayer here or for corrupted rich corporation? Where's my Bonus?
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      03-19-2009, 06:25 PM   #2
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Wait WTF??? Wow that's the dumbest thing I've ever heard. If they didn't want them to pay out the money as bonuses then they should have never bail them out in the first place. I just don't get it...
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      03-19-2009, 06:40 PM   #3
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In most cases, these bonuses are exponentially higher than their actual salaries. I know plenty of people that get bonuses and count on them every single year. Its not a "bonus" in terms of great job, heres a ridic amount of money. Its more of a percentage.
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      03-19-2009, 06:41 PM   #4
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now this one is funny they found out at least 13 companies getting bailout owe more than 220 million unpaid taxes. lol it gets funnier and funnier everyday http://finance.yahoo.com/news/13-com...-14695686.html

lets see how far we can get when we stir the pot, I would not be surprise to find out out of the 100s of some banks getting bailout all of them owe unpaid taxes.
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      03-19-2009, 06:45 PM   #5
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Originally Posted by BForbes View Post
In most cases, these bonuses are exponentially higher than their actual salaries. I know plenty of people that get bonuses and count on them every single year. Its not a "bonus" in terms of great job, heres a ridic amount of money. Its more of a percentage.
Why do most company give higher bonuses than salary you think? cause there's a method of not paying a single dime on taxes on bonuses.
I understand in some cases but just yesterday you hear the senators warning AIG to return 100% of the bonuses or else we will tax 100% of that. Why the change of heart? was it a mistake and a cover up by the Obama's team? does it have anything to do with the last minute bonus addition in the stimulus package?
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      03-19-2009, 08:09 PM   #6
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Why do most company give higher bonuses than salary you think? cause there's a method of not paying a single dime on taxes on bonuses.
please explain..
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      03-19-2009, 08:24 PM   #7
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I potentially have an entirely different problem with this... Doesn't this tax border on being an ex post facto law? By this I mean that they are trying to legislate the bonuses away by changing the tax code after the fact that the bonuses have already been paid out. I suppose taxes on them technically won't be due until April of 2010, but still... Is this not a borderline case of an ex post facto law, and therefore unconstitutional? I really don't know how this works with taxes, so if someone could enlighten me I'd greatly appreciate it.
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      03-19-2009, 08:39 PM   #8
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It's a shame it has to come to this kind of thing to reign in the brazen criminals that have infested our large corporations. These guys don't deserve bonuses, they deserve to be in jail. I'm not a huge fan of the legislation they just passed, but if that's the only way to drive the point home that this sort of behavior will have stiff consequences, then I guess that's how it has to be.
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      03-19-2009, 10:55 PM   #9
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so does that mean that all the congressmen and women and Obama that took political donations (over $1million total) from AIG execs have to give those back? or pay 90% tax on them?
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      03-20-2009, 01:43 AM   #10
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Oh, this is diabolical brilliance! Think about it, the TARP funds are technically a loan to AIG, and hopefully the Treasury will get that money back, plus interest (or whatever conditions were placed on the bailout funds, I thought it was LIBOR + 8.5%, steep!) I'm not sure we'll ever see those funds come back, but let's assume we do.

So, funds go to AIG, that AIG the company is expected to pay back. AIG takes some of those funds and pays out bonuses. The Gov gets pissed about the bonuses because the public is pissed, and to cover up the Gov's faulty plans (not putting conditions on how funds can be used), the concoct this 90% tax on bonuses. This is where the diabolical brilliance comes in.

AIG still OWES the full amount of the TARP funds received, regardless of how those funds were spent.
AIG paid out bonuses, and those bonuses will be taxed at 90%. But AIG isn't paying that tax, the recipients of the bonuses are, on their PERSONAL tax returns.

So the government is in a position to receive ALL the TARP funds back, plus interest AND, they will collect a 90% tax on the bonuses that were paid. That means the government gets an even BIGGER return on their investment!

AIG loans: $150 billion plus interest stipulated in the bailout (estimated at 14%) = A LOT
AIG Bonus taxes: $160 million taxed at 90% = an additional $144 Million.

Of course, who knows how much money AIG will actually ever be able to pay back. But if they somehow manage to do it, the government is going to make a ton of money on the deal.
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      03-20-2009, 01:53 AM   #11
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I potentially have an entirely different problem with this... Doesn't this tax border on being an ex post facto law? By this I mean that they are trying to legislate the bonuses away by changing the tax code after the fact that the bonuses have already been paid out. I suppose taxes on them technically won't be due until April of 2010, but still... Is this not a borderline case of an ex post facto law, and therefore unconstitutional? I really don't know how this works with taxes, so if someone could enlighten me I'd greatly appreciate it.
I originally thought it was ex-post facto, which I think it still is. It also qualifies as a bill of attainder, I believe:

http://en.wikipedia.org/wiki/Bill_of_attainder

Regardless, I highly doubt this will be put into action, it's more to make a political statement and get themselves reelected.

Also, don't know how these companies supposedly don't pay a dime in taxes for bonuses. To the best of my knowledge, that's untrue, and not to mention, yes, these bonuses are often times double, or even triple or more that of their salaries, so their base compensation is fairly low relative to total compensation. So yes, they are dependent upon them. I work in the industry, and that's what I've experienced and seen to be the case.
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      03-20-2009, 04:30 AM   #12
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Originally Posted by scollins View Post
Oh, this is diabolical brilliance! Think about it, the TARP funds are technically a loan to AIG, and hopefully the Treasury will get that money back, plus interest (or whatever conditions were placed on the bailout funds, I thought it was LIBOR + 8.5%, steep!) I'm not sure we'll ever see those funds come back, but let's assume we do.

So, funds go to AIG, that AIG the company is expected to pay back. AIG takes some of those funds and pays out bonuses. The Gov gets pissed about the bonuses because the public is pissed, and to cover up the Gov's faulty plans (not putting conditions on how funds can be used), the concoct this 90% tax on bonuses. This is where the diabolical brilliance comes in.

AIG still OWES the full amount of the TARP funds received, regardless of how those funds were spent.
AIG paid out bonuses, and those bonuses will be taxed at 90%. But AIG isn't paying that tax, the recipients of the bonuses are, on their PERSONAL tax returns.

So the government is in a position to receive ALL the TARP funds back, plus interest AND, they will collect a 90% tax on the bonuses that were paid. That means the government gets an even BIGGER return on their investment!

AIG loans: $150 billion plus interest stipulated in the bailout (estimated at 14%) = A LOT
AIG Bonus taxes: $160 million taxed at 90% = an additional $144 Million.

Of course, who knows how much money AIG will actually ever be able to pay back. But if they somehow manage to do it, the government is going to make a ton of money on the deal.
I actually understood that! AWESOME
Nice write-up!!!
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      03-20-2009, 07:46 AM   #13
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      03-20-2009, 07:52 AM   #14
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Quote:
Originally Posted by anmcguire View Post
I potentially have an entirely different problem with this... Doesn't this tax border on being an ex post facto law? By this I mean that they are trying to legislate the bonuses away by changing the tax code after the fact that the bonuses have already been paid out. I suppose taxes on them technically won't be due until April of 2010, but still... Is this not a borderline case of an ex post facto law, and therefore unconstitutional? I really don't know how this works with taxes, so if someone could enlighten me I'd greatly appreciate it.
You're right. Two wrong doesn't make a right. As much as I hate AIG using bailout money for bonuses this issue will probably go to court and sadly AIG has a good case.
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Last edited by johnnymu; 03-20-2009 at 09:07 AM.
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      03-20-2009, 08:30 AM   #15
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There is a rich-hunt going on in this nation. and Congress is leading with the pitchforks.
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      03-20-2009, 08:44 AM   #16
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There is a rich-hunt going on in this nation. and Congress is leading with the pitchforks.

When the rich are acting like this...they deserve it!

This is unbriddled greed, and nothing more. These guys didn't do anything to deserve a bonus, especially not from a company that wouldn't even exist right now without the taxpayer's stepping in and bailing them out. If AIG had been allowed to go under (as it certainly would have) these arrogant bastards would be out of work completely (which they should be), but instead they're soaking up massive bonuses at the taxpayer's expense, after creating the situation that caused the need for a bailout in the first place!

Anyone defending bonuses for these guys is out of their mind....or one of them.
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      03-20-2009, 09:08 AM   #17
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Originally Posted by johnnymu View Post
Why do most company give higher bonuses than salary you think? cause there's a method of not paying a single dime on taxes on bonuses.
I don't think you have a clue. As someone who works in finance, and who receives a bonus that is larger than my salary, let me explain how it works. The word "bonus" is not an accurate description of what the payment represents. A better description would be defferred commission. When a deal is booked a portion of the profit goes into the bonus pool. At the end of the year that pool is divided among the people who work at the firm. If you are responsible for a large portion of the profit in your group or in the firm as a whole, you will get a larger chunk. The potion of profit that goes in to the pool is generally well known and the size fo the pool is reported through out the year to upper management. Some people will have gauranteed contracts where they receive a fixed percentage of the profits they generate.

When the bonus is paid you are taxed on it. Just like when your salary is paid. Some banks will pay a portion of the bonus in restricted stock, and the tax on that may be deferred until you sell the stock, but tax is still paid eventually.
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      03-20-2009, 10:15 AM   #18
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does anyone have a link to the bill they passed?

I cant find it, and I'm curious if they stuck anything else in with it
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      03-20-2009, 10:17 AM   #19
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Quote:
Originally Posted by jeremyc74 View Post
When the rich are acting like this...they deserve it!

This is unbriddled greed, and nothing more. These guys didn't do anything to deserve a bonus, especially not from a company that wouldn't even exist right now without the taxpayer's stepping in and bailing them out. If AIG had been allowed to go under (as it certainly would have) these arrogant bastards would be out of work completely (which they should be), but instead they're soaking up massive bonuses at the taxpayer's expense, after creating the situation that caused the need for a bailout in the first place!

Anyone defending bonuses for these guys is out of their mind....or one of them.
I'm not defending the bonuses given out to the AIG execs(in fact, I find them somewhat distastefull), but recent discussion and posturing by Congress and the media leads me to believe that Class warfare has again reared its ugly head.

What AIG did was:

Underwrite insurance on the CDO's that were created by the Investment banks. The CDOs are the collective mortgages of both prime and subprime loans.

They underwrote the CDOs during the market euphoria days in whcih the mantra was "Real estate is a safe bet and can't fail" and did not have enough assets to back up the insurance.

We can all look out the rear view mirror and blame AIG for underwriting a failed investment, but I think that in reality, everone should look in the mirror closely and determine whether or not we overleveraged ourselves, individually and/or collectively.

Lastly - Congress and the Sec of the Treasury fully knew that AIG was going to pay out bonuses when they agreed to send the TARP money to AIG.
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      03-20-2009, 10:25 AM   #20
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They underwrote the CDOs during the market euphoria days in whcih the mantra was "Real estate is a safe bet and can't fail" and did not have enough assets to back up the insurance.

We can all look out the rear view mirror and blame AIG for underwriting a failed investment, but I think that in reality, everone should look in the mirror closely and determine whether or not we overleveraged ourselves, individually and/or collectively.

.

And here's where my biggest issue with the whole mess lies. What was about to happen to the real estate market was OBVIOUS. I'm an electrical engineer, and I was able to predict it years ago. Someone who's paid millions of dollars every year to keep a close eye on it and make investments accordingly DAMN SURE should have seen it coming.

The real estate market had no choice but to fail. Housing prices CAN NOT outpace wages forever. The year over year gains that were being seen were absurd, and these guys are paid NOT get caught up in euphoria. That's why I want then hanged. This isn't a matter of someone getting blindsided by an crazy market. They knew EXACTLY what they were doing, and they did it anyway, knowing they'd just jump ship with millions in their pockets and leave someone else holding the bag....and now that the taxpayers have bailed them out, do they seriously expect us to stand by and watch while they take another chunk for themselves?
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      03-20-2009, 10:32 AM   #21
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I don't think you have a clue. As someone who works in finance, and who receives a bonus that is larger than my salary, let me explain how it works. The word "bonus" is not an accurate description of what the payment represents. A better description would be defferred commission. When a deal is booked a portion of the profit goes into the bonus pool. At the end of the year that pool is divided among the people who work at the firm. If you are responsible for a large portion of the profit in your group or in the firm as a whole, you will get a larger chunk. The potion of profit that goes in to the pool is generally well known and the size fo the pool is reported through out the year to upper management. Some people will have gauranteed contracts where they receive a fixed percentage of the profits they generate.

When the bonus is paid you are taxed on it. Just like when your salary is paid. Some banks will pay a portion of the bonus in restricted stock, and the tax on that may be deferred until you sell the stock, but tax is still paid eventually.

Thank You sir. Thats what I was trying to say above.

I do fear that a ''rich-hunt'' is going on as well. Whether its fair and the length it should go on is still up in the air.
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      03-20-2009, 12:42 PM   #22
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There is a rich-hunt going on in this nation. and Congress is leading with the pitchforks.
huh? congress is skimming $$$ off the top - they are dirty .
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