Reid: Tax on AIG bonuses coming in next 24 hours

[kpete]

Source: CNN

Senate to explore taxing controversial AIG bonuses
Posted: 11:38 AM ET

WASHINGTON (CNN) — Senate Democrats want to tax the controversial bonuses doled out to AIG employees who work for the division that led to the company's downfall.

Senate Majority Leader Harry Reid announced on the Senate floor Tuesday that the tax-writing Senate Finance Committee will pursue a legislative fix in such a way that the "recipients of those bonuses will not be able to keep all their money — and that's an understatement."

Senate Finance Committee Chairman Max Baucus, D-Montana, will propose a special tax within the next 24 hours, Reid said.

"I don't think those bonuses should be paid," Baucus said Tuesday.

The idea was first floated Monday by Sen. Christopher Dodd, chairman of the Committee on Banking, Housing and Urban Affairs.

Read more: http://politicalticker.blogs.cnn.com/2009/03/17/senate-to-explore-taxing-controversial-aig-bonuses/?ref=fp1

[Democrats_win]

1. It's ok, but we need to stop payments on the AIG's credit default swaps and all that.

We all know these bonuses are wrong and that they are just small peanuts.

[Jambalaya]

42. Past is prologue -AIG has LONG been on Komisar's radar

FINANCE-US: AIG's Past Could Return To Haunt *This is the first of a two-part series on how AIG helped clients cheat on taxes. New York journalist Lucy Komisar reported on the AIG story as part of her ...
ipsnews.net/news.asp?idnews=45175 - 56k - Cached - Similar pages



For The Record: Repost: FTR #531 Interview with Lucy Komisar about ... Sep 23, 2008 ... (Note that the material on AIG was drawn from Lucy Komsar’s two articles written for AlterNet: “The Fall of a Titan” by Lucy Komisar; ...
ftrsummary.blogspot.com/2008/09/repost-ftr-531-interview-with-lucy.html - 357k - Cached - Similar pages

[TayTay]

2. Isn't most of that division in London? n/t

[AzDar]

3. 100 % sounds about right.

:thumbsup:

[Ganja Ninja]

7. Make it 125%.

They need to be sent a message.

[GOTV]

11. Amen

[Myrina]

15. YES!

:applause:

[Lorien]

24. Sounds good to me. Any exec with a FAILING INSTITUTION that asks for

a taxpayer bailout needs to have their unearned bonuses seized-with interest!

[Ganja Ninja]

32. If they're gonna put us through all this trouble then its time to make them sorry for it.

Like a misbehaving little kid they need punishment. Bad enough we have to bail them out. This is galling, brazen and unrepentant company sanctioned embezzlement.

[lonestarnot]

60. 300 for all the trouble they caused!

[jody]

4. Forget taxes, is there a law under we can convict them for embezzlement or other crime? n/t

[Wizard777]

18. No the Bonuses are a contractual obligation.

The Constitution prohibits the government from impairing the obligation of a contract. But they can Tax the living hell out of the bonuses. It doesn't come off the principle of the loan that way.

[jody]

21. Courts routinely overrule contracts as I know from personal experience. n/t

[Wizard777]

29. Only if they are written outside of the law. It's not against the law to give an executive a Bonus.

It should be. But it's not.

[jody]

33. I'm not a lawyer but I've been both plaintiff and defendant and know courts can and do override

contracts.

[mbperrin]

61. It's probably against the law to take a retention bonus and quit.

11 of them so far have done that.

[bvar22]

51. That's ONE of the things that bothers me.

How can a "BONUS" be part of the contract?
Wouldn't it simply be considered "compensation or wages" if it is actually part of the contract. :shrug:

To me, and every place I have worked, the BONUS was a variable option that was over and above what was "contracted".

[radfringe]

5. waiting for the WHAAAAAAAAAAAAAmbulance

to be called for the NOPers...

[Bok_Tukalo]

6. How do you single out individuals for a special tax rate?

Hard to believe that is constitutional let alone the ethical and precedent setting problems I have with it.

[denverbill]

8. They aren't setting individual tax rates.

The rates would apply to employees of companies getting bailouts. It's no different from laws stating that hedge fund managers will be taxed at the capital gains rate rather than the ordinary income rate.

The only ethical problem I see is the granting of the bonuses to these failed millionaires. Personally I think they should be allowed to fail, nationalized, everyone making over $200,000 fired, be run by the government until profitable again, then split into tiny pieces and sold off.

How you can call it unethical to keep the idiots who ran these institutions into the ground through their own greed and/or incompentance from getting bonuses for their own moral and judgmental failures is beyond me.

[Kurt_and_Hunter]

10. Their contracts are valid or they are not valid

They are not subject to legislative amendment after the fact.

If the government wants to resist paying, challenging the contracts themselves in court, cool.

But the rules must be the rules.

Living in a world where Congress picks somebody and tries to figure how to go after them would not be very good. Imagine of the pugs have levied a surcharge on profits from documentaries that grossed over $5 million in 2004.

Fahrenheit 911 was the only film meeting that description.

No matter how artfully it was phrased, the point of the bill would be to go after Michael Moore. And that's no way to run a government.


Two words: Terri Shiavo

[Triana]

19. The union contracts at GM were damn well amendable after the fact and furthermore...

..those amendments were required prior to the Fed giving them any money.

What's the diff? If they can do it with GM - they can do it with AIG.

[Kurt_and_Hunter]

28. I am with you in spirit, but the unions agreed to those measures.

I agree 100% on the smell test aspect of this.

But the unions had to agree to abrogate their contracts for the deal to go down.

[KamaAina]

40. Co's go into bankruptcy all the time in order to rip up their union contracts

and bankruptcy is exactly where AIG would have been, were it not for the bailout.

These are bonuses, not salary. Would you or I get a bonus for running a company into the ground?

[louis-t]

34. Michael Moore did not receive a bailout.

That's the difference.

[fjc]

35. Taxing those bonusus in no way violates their contracts.

The bonuses get paid, as per agreement. And the rules are still the rules.

[Abq_Sarah]

63. You can't.

It is both illegal and unconstitutional to write laws designed to punish an individual or specific group.

Instead of all this congressional faux outrage over those bonuses which they should have know about if they'd done their homework, perhaps they ought to be worried that we'll wake the hell up and ask why they wrote laws that benefited the financial and insurance industries while raking in campaign contributions from the same groups.

[OwnedByFerrets]

9. One drop in the ocean......this is only important if its the tip of the

iceberg and the remainder gets investigated.

[fjc]

36. It ain't the money. It's about morals and politics.

[Jambalaya]

41. Reality vs deception-----------------AIG hired big $ bux PR group

AIG hires Burson-Marsteller - White House Feb 2, 2009 ... AIG hires Burson-Marsteller - NEW YORK: Embattled insurance company, American International Group (AIG), has retained Burson-Marsteller for PR services. ... An AIG spokesman told PRWeek that the firm was being retained ...
beltwayblips.dailyradar.com/story/aig_hires_burson_marsteller/ - 31k - Cached - Similar pages

[Prisoner_Number_Six]

12. Gonna get some payback- probably all of 1% or so...

:shrug:

[GOTV]

13. That's how Congress can LOOK like they're doing something ....

... without actually hurting their friends at AIG

[rocktivity]

14. Either give the money back or pay at least 100% tax on it

BECAUSE YOU DIDN'T EARN IT. "I'll give you a million dollars if you don't quit" shouldn't be contractually valid when it's bailout money and not revenue. Besides, if you performed so poorly that your company NEEDED a government bailout, YOU OUGHT TO BE FIRED!!!

:headbang:
rocktivity

[cascadiance]

49. Tax has to be levied on the individuals, not the companies...

Otherwise, they'll still get away with murder!

[aquart]

16. Sounds mean and vengeful. I like it.

Hey, better than handing them the hara kiri knife. Which also has some appeal.

[Igel]

17. Close to ex post facto.

Also very close to being a bill of attainder (as defined in statute, not historically).

Neither is exactly an upstanding legislative act.

[Alhena]

20. Any employee who files a lawsuit will be excoriated in the press

and it will be a lengthy and expensive judicial process in which the judges will likely be looking for reasons to find the act constitutional.

[Kurt_and_Hunter]

23. You forgot "taint of blood"

Joke.

But kind of not a joke... some secretary will get her $1000 bonus cut simply because she is of the House of AIG. Nothing against her... it's the corporate initials that are being targeted.

It's just not a good philosophy of legislation all-around.

[lark]

43. Sometimes you have to go with the art of the possible

instead of the right way. The right way would be tell AIG no bonuses and take them to court. Actually I think they should demand all the money immediately and let them fail. We are already propping up the banks, why prop up AIG to also prop up the banks? Just do it directly and cut out the middleman. In fact, I favor letting the banks fail, nationalize them, fire the CEO's and other miscreants, and install strict guidelines and oversight and sound ethical management. Screw all these millionaires who have destroyed the world for their own fat checks sake. Why should everyone else but them be hurting? Make them pay for their sins.

However, having a gutless government (major disappointment here), I think the tax idea might be the best possible alternative.

[aquart]

65. I know, I know.

But my personal alternative is the guillotine.

[Demeter]

22. Bad Move

This is discriminatory on its face. The IRS and Tax Code are not meant to be used as punishment applied selectively to people who have offended sensibilities. The Supremes will immediately overturn.
Unanimously.


Edited to add: This is exactly the kind of leadership we've come to expect from Harry Reid: FUBAR!

[Alhena]

25. That's not how it works- has to go to district court, then appellate court, then Supremes

[Demeter]

27. Oh No It Doesn't!

The Supremes can do it right off the bat, and have, this bunch has a record of that.

[sendero]

50. I don't think the SCOTUS..

... will even hear this. We'll see.

[Kurt_and_Hunter]

26. That assumes Obama signed it

I know, know... he would.

But he shouldn't.

It drives me crazy for the SCOTUS to be used as some kind of over-draft protection for bogus legislation.

Everyone takes an oath to preserve the Constitution.

[fjc]

37. The Supreme's can't over-ride the power of Congress to tax.

[Demeter]

45. Dream on!

[Angleae]

59. Why not?

They've done it before.

[phillyindependent]

30. Well its looks like these bonus payments are actually allowed by LAW...

according too HR1 - American Recovery and Reinvestment Act:

Division B: TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND OTHER PROVISIONS
Title VII: LIMITS ON EXECUTIVE COMPENSATION
Section 111: EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

(b)(3)(D)(iii) The prohibition required under clause (i) shall
not be construed to prohibit any bonus payment required
to be paid pursuant to a written employment contract
executed on or before February 11, 2009, as such valid
employment contracts are determined by the Secretary or
the designee of the Secretary.

......................................
I'd be interested in who put this in the bill. According to online rescources, they say is was Dodd. But I can not confirm that.

[fjc]

38. What does it matter? They can still be taxed.

[dysfunctional press]

57. the unit that caused all the problems is based in london...

so u.s. tax law may not even apply to some, most, or all of them...:shrug:

[dysfunctional press]

31. some of the bonuses ARE deserved, and SHOULD be allowed.

retention/loyalty type bonusses- where you get X amount of dollars for every year of service, and even incentive bonusses where the employees met the targeted goals in their respective divisions, etc...not ALL of the bonus money being paid out is undeserved. in a lot of ways, the meaning of the word 'bonus' is being twisted around in the same way creationists twist the word 'theory'. it doesn't always mean the same thing in all situations.

[fjc]

39. Maybe so, but the bulk is going to the division most responsible

for the failure of the company. That is just plain wrong.

[Gin]

44. they were already paid the money and I'm sure it's in some foreign bank...isn't it

too late for the last round of bonuses?

[dysfunctional press]

56. seeing that that particular group is based in london, it's a good bet.

nt

[demo dutch]

46. the majority of the AIG people that got bonuses, quit AIG.. so much for retention

[dysfunctional press]

55. "the majority"...? the number i had heard was 11 people earlier today on the noon news, iirc...

how many people had you heard it being?

and if they left after the time-frame covered by the bonus, that's their right. for instance- if the bonus was paid for them having stayed thru the end of 2008, and they quit in january 2009- the bonus is still theirs.

[bobburgster]

67. Jump on the New Bandwagon...

It always amazes me how quickly politicians jump on the new bandwagon of outrage! They rant, rave, talk tough, get a good sound bite of publicity, and then they return to doing the same old thing.

[demo dutch]

47. It's Sen Dodd who created this mess with his amendment after he collected lots of campaign$ from AIG

[cascadiance]

48. The problem is many of these execs perceive they are at an "Enron stage"...

They DON'T CARE if their companies pay a lot higher taxes in exchange for them STEALING our money before they "get out while the gettings good". If they don't care about the company's future or anyone affected by its collapse these sorts of taxes won't stop them from "helping themselves". The only thing that will stop them is to seize control (aka nationalize) these companies and to go in and prosecute them or penalize them somehow personally for what they are doing now. The sooner we get them out of power where they can rape the company and in so doing rape all of us, the better off we'll be. And find some way of putting them away so we won't see their sorry asses anywhere else screwing us.

[bemildred]

52. Rep Frank: Government should sue AIG to recoup bonuses

WASHINGTON (Reuters) - The U.S. government should use its position as majority stakeholder to sue American International Group Inc and recoup millions of dollars of bonuses paid to employees, the chairman of the House of Representatives Financial Services Committee said on Tuesday.

Representative Barney Frank also told reporters the government should not risk discouraging foreign investment by only paying AIG's counterparty obligations to U.S. entities.

"I think we should be suing to get the bonuses back as the owner (of AIG)," Frank said. "I think it's time for us to exercise our ownership rights."

AIG, which is being kept alive on a government bailout of up to $180 billion, is paying out $165 million in bonuses to employees. Word of the bonuses has touched off a firestorm of criticism in Congress and from the Obama administration.

http://www.reuters.com/article/newsOne/idUSTRE52G59F20090317

[Virginian]

53. dup deleted n/t

[Virginian]

54. How about repealing Bush's tax cuts.

These are some of the very people who benefited from the Bush tax cuts for the wealthy.

[pam4water]

58. I think they want the bonuses to use to flee the country. If anyone ever looks inside the

books at AIG and see how much fraud they pulled, there would be warrants for their arrests.

[Nye Bevan]

62. How about a tax *reduction* for auto workers?

Say 5 to 10%, for the next 2 to 3 years? To help them recoup some of what they were screwed out of.

[Norquist Nemesis]

64. I rather see them charged with fraud and extortion. n/t

[Mr. Hyde]

66. How about the US tax dollars given away to foreign banks Harry?

Or is that OK? This whole AIG bailout stinks to high heaven. It was a big aas mistake from day one and the fact that our leaders fought so hard for it suggests that they are either absolutely clueless or little different than the previous administration. Our forefathers, could they speak from their graves, would be saying, "we told you so". US citizens are now handing the fruits of their labor over to foreign banks. Does nobody else have a problem with this or are we just too busy ranting and raving about bonuses to AIG assholes to notice?