Bonuses

It looks like they’re going to try to tax away the bonuses received by those AIG managers and others who work for companies that have accepted bailout money.

Don’t get me wrong, I am not happy about those huge bonuses. Those people make more money in a year than I will probably see in my lifetime, and I doubt that level of compensation is justifiable for what they actually do.

But a deal is a deal. Those contracts were signed in good faith by AIG and their employees before the bailout and before the government got involved. No matter how you slice it, a deal is a deal.

For the government to come in and nullify a contract is clearly illegal. If contracts are no good, we have no basis for doing any sort of business.

Punitive taxes on those who weren’t doing anything illegal or wrong at the time those contracts were signed is wrong, too, in my view. Because, who will the government go after next? There has to be some limit on who and how the government can levy taxes against. This particular case seems to have aspects of a vendetta – or a witch hunt.

I can certainly understand making huge bonuses illegal on future business that takes a bailout; and even requiring that such a law override preexisting contracts; – but doing it retroactively stinks.

-Popgun

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3 Responses to Bonuses

  1. Maureen Mower says:

    I agree. In fact, I posted a very similar article on my blog a short time ago. Have a look if you want…

    http://maureenmower.com/2009/03/19/33/

    I’m going to add a quote from your post and give you a nod as well.

  2. lastpersonleft says:

    MM,
    Thanks for your comment! I enjoy the free exchange of ideas and your are most welcomed. And though there may be valid points to the “bonuses”, the political reality, I believe, makes this whole episode unacceptable qnd most shameful.
    I thank you for taking the time to read and reply to my piece. I read your article on the issue and though I disagree with the premise, I enjoyed your writing.
    Again, thanks for the input. I have put you on my blogroll and look forward to reading more of your stuff. (As long as you do not shoot me… LOL)
    LPL
    Read-Learn-Think-Act!

  3. Ali says:

    I can’t help but agree, and add a few further thoughts. . .

    1. With a company of AIG’s size and multi-division configuration, there are also many employees who have been working in good faith, low-risk ways, and without a doubt deserve their contractual entitlements. It’s a sticky situation–do all employees of gov’t assisted companies get their bonuses taxed? What if Division 1 of Company X showed a profit, while Division 2 showed a loss? Are taxes levied against only one group of employees? What if the loss-weighted divisions were in non-risky, non-economically damaging areas?

    2. Because we all know that I’m a hopeless process & theory geek. . . to call that tax bill that passed anything but habeus corpus is political sophistry of the highest level. It is a punitive measure enacted to retroactively address actions that “should be illegal” according to the legislataive body. Granted, the government is using a measure that any strict constructionist in the judiciary would have to concede is a recoupment proceedure and entirely within their powers, but the intention is clear, and clearly wrong.

    That aside. . . you son mentioned a contractual agreement that I’m fascinated to hear more about. Something about him digging the pool, you buying the concrete? Because he’s difficult and stubborn, he refused to tell me the story. Will you?

    🙂

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