90% tax on US AIG bonuses

[RDM]

But this piece of retrospective legislation is, as far as I know, only being put in place because of the lack of regulation applied to the bailout bills by the Bush Administration.

So essentially, Obama is having to deal with Bush's mistakes therefore he's playing a political game and needs to be seen to be doing something about these bonuses that he initially had no real say over.

Is any of that right?

So it is OK to do retrospective legislation due to errors of a previous administration? I think it is a matter of principle, the government using creating retrospective laws is a bad thing. It makes contracts worthless and makes living in such a state a lottery as retrospective legislation could be applied at any point. But as long as the target is people we don't like all is well?

Most of us will work jobs with short contract saying in a nutshell " you do you work right you keep your job, you don tyour fired, andif times get tuff we can let you go a short period of notice", no big payoff no bog Gov sponsored rescue plan coming to save us, we ar out on our todd.

So your company gets in to trouble, the government bails it out and then changes your notice period from 4 weeks to 1 day and you are fine with that? Or it decides that it no longer pays overtime and so retrospectively reduces your salary. Or it decides that the final salary pension is too expensive and retrospectively changes it to a money purchase pension instead? Or decides to give you a retrospective pay cut? You would be fine with that?

This does not set a president for legitration in the future it will have no bearing on any such thing, it can't and wont.

Yes it does. It sets the precident that if public opinion calls for it the government can set up retrospective legislation to win itself favour rather than actually dealing with a real problem.

 

[RDM]

RDM, obviously you are twisting this to suit your POV. Remember, just for a minute, what these people would be doing if the government hadn't bailed out their company? They wouldn't have a job, let alone a contract and certainly not a sniff of a bonus. I think, even if they got 0% of their bonus, they have come out of the situation a lot better than most. After all, they still have a job.

I don't really care about what would have happened to them, if they would have got their bonuses or not. What I don't like is the idea of retrospective legislation. This is what I have been arguing against. Retrospective legislation is almost always (if not always) a bad idea.

 

[Chimerical]

So it is OK to do retrospective legislation due to errors of a previous administration? as long as the target is people we don't like all is well?

Well, in this situation I can understand why it is happening. Obama's coming under fire for a situation that he did not help create. This is a knee-jerk reaction essentially.

It isn't safe to be totally swayed by public opinion but these are pretty unique circumstances.

And anyway, its up to America what their Government does with domestic issues like this.

 

[RDM]

Well, in this situation I can understand why it is happening. Obama's coming under fire for a situation that he did not help create. This is a knee-jerk reaction essentially.

And that is the bit that makes me sad. People are happy to have governments implement knee-jerk legislation.

It isn't safe to be totally swayed by public opinion but these are pretty unique circumstances.

Personally I am not so sure that they are all that unique. Sure the bail out is pretty much unprecedented, but bonuses (especially retention bonuses) are far from unique and neither is government aid.

And anyway, its up to America what their Government does with domestic issues like this.

It does have some parallels though with some of the noise from our ministers and "the court of public opinion". Would suprise me if Gordon Brown takes it as a green light to do something similar...

 

[Chimerical]

And that is the bit that makes me sad. People are happy to have governments implement knee-jerk legislation.

Normally I'm against this kind of thing. For example, without going off-topic, knee-jerk legislation was afaik put in place for social workers after the Victoria Climbie case due to the publicity surrounding it. Such things are usually known as 'reforms' but essentially, it was a case of knee-jerk policy being used to satisfy the blood-thirsty public.

However, although I do not agree with that kind of thing in an objective sense and in principal, but I am willing to be more subjective over this Obama Administration proposal (?).

Yes, that is a bias and yes, its inconsistent, but really I don't care. I'm happy to let personal prejudice "cloud" my mind when it comes to these kind of people and their bonuses. I don't understand the economy and I usually seem to believe what any politician says on television about it.

Personally I am not so sure that they are all that unique. Sure the bail out is pretty much unprecedented, but bonuses (especially retention bonuses) are far from unique and neither is government aid.

But its the times that we are living in. The credit crunch has drilled a large amount of highly effective hindsight into everyone's minds so although you do not agree with such legislations, they seem to be pretty inevitable.

It does have some parallels though with some of the noise from our ministers and "the court of public opinion". Would suprise me if Gordon Brown takes it as a green light to do something similar...

Well yes, exactly. Our Government might do something similar and then maybe lots of other Governments would create retrospective legislation as you put it. But if and when that happens then it'll be commonplace and a much bigger "issue" that will be beyond us worrying about it.

 

[singist]

OK, having read a little more, including the title of this thread:

As far as I can tell, nobody is trying to change any contracts ........ what they are proposing is to TAX these fat cats differently; not the same as changing contracts at all, so all those arguments about contracts are fallacious.

Personally, I hope they squeeze every penny out of the immoral scum!


No one has quoted this yet so: Northern Rock ................. "The National Audit Office report on the Treasury's handling of the crisis found the bank was still giving mortgages of up to 125% in early 2008."

http://news.bbc.co.uk/1/hi/business/7952923.stm

 

[Dolph]

OK, having read a little more, including the title of this thread:

As far as I can tell, nobody is trying to change any contracts ........ what they are proposing is to TAX these fat cats differently; not the same as changing contracts at all, so all those arguments about contracts are fallacious.

The government can't apply penalities, taxation or otherwise retrospectively.

I wouldn't be complaining anywhere near as much if the tax applied from bill completion, but it wasn't, it was applied retrospectively.

Would you support a retrospective raising of the income tax rate for the 2008-2009 financial year?

 

[singist]

The government can't apply penalities, taxation or otherwise retrospectively.

I wouldn't be complaining anywhere near as much if the tax applied from bill completion, but it wasn't, it was applied retrospectively.

Would you support a retrospective raising of the income tax rate for the 2008-2009 financial year?

To answer your question:

Yes, if it applied to anyone being paid (notice, I didn't say earning) over 250k a year ......




Then raise the scarlet standard high ........ forward brothers!

 

[Dolph]

To answer your question:

Yes, if it applied to anyone being paid (notce, I didn't say earning) over 250k a year ......

So you're ok with random changes to people's rights as long as they don't affect you?

People who earn more shouldn't be afforded the same rights as other people?

Then raise the scarlet standard high ........ forward brothers!

I'm hoping this means you're actually joking

 

[Stretch]

Because public opinion leads to bad laws, because it tends to trample all over the rights of the minority opinion, and everyone has a minority opinion or position on something.

If people have rights, public opinion is not sufficient to override it.

I'm not saying it's a good idea. I'm just saying it's in the government’s interest if they want to get re-elected.

 

[Dolph]

I'm not saying it's a good idea. I'm just saying it's in the government’s interest if they want to get re-elected.

Which is precisely why governments must not be allowed to pass random laws based on popular opinion.

 

[i know nothing]

Following on from my last post, and with a bit more digging, the reality of the matter is that these bonuses were retention bonuses to those working to wind down the financial products division at AIG. That is, people who agreed to stay in a dead end job working to close something down.

Fair enough then, they should be entitled to keep their bonuses then. They can join "Tom".

I believe that most people perceive the people who have been awarded a bonus to be director level etc. Clearly they shouldn't be taking a bonus home!

 

[Fourstar]

Have a look at this video. The section where the presenter goes through regulatory changes since 2000 might give some of you a new perspective on the bonuses and how AIG created some of the mess they're in.

 

[Berserker]

If Obama is the constitutional scholar he claims to be, he should refuse to sign it into law.

And, to give Obama his dues, it appears that he agrees with you - referring to the tax bill as 'unconstitutional'. Not that this view is ever likely to be put to the test given that it seems a sizeable proportion of the bonuses are now to be repaid:

http://news.bbc.co.uk/1/hi/business/7960459.stm

 

[singist]

Looks like some of the bonuses will be paid back:

http://news.bbc.co.uk/1/hi/business/7960459.stm




EDIT:far too late it seems with this.

 

[fini]

What people seem to forget is that in many cases these guaranteed bonuses are not so much a 'bonus' in the normal meaning of the word - they are effectively a major part of these people's normal income, just listed in their contracts as a 'bonus' for tax purposes. What such a bill is thus effectively advocating is that if we don't like the job that someone's done (and lets be clear here, they've not broken the law) we can stop them getting their wage.

Disappointed with the medals got by Olympic athletes? Take away their wage.
Those cancer researcher's still not come up with a cure? Bye bye pay check.
Your kid failed his exam? Congrats, you don't have to pay the private school he's at any more...

Any law aimed at specific persons or a single company are almost always repugnant.

Laws that are retrospective are usually repugnant. You spend your money based on what you reasonably receive you're likely to receive - you take this away from people and what does it do to people's willingness to spend?

The whole concept of 'not rewarding incompetence' is also at best stupid. Firstly, very few thought at the time how dangerous the spending was - as can be seen by pretty much the whole industry doing the same thing. Secondly, there was pressure by government to do exactly what they did. Thirdly, employers already have a way of dealing with incompetence - they sack you. Imagine going to a meeting and being told not only are you being sacked, but, because they really haven't been pleased with your performance for the last 6 months either, you owe them half a year's salary back. For some it seems that this is fine - as long as you earn over x amount.