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Punished Enough
Mar. 26th, 2009 02:43 pmI wasn't going to say anything about the AIG bonuses. Really, I wasn't, because I think the whole furor is silly, making a huge issue over a tiny symptom.
Then I read this.
Short version:
It is not possible, under current US tax law, for an employee to return income to his employer and have that money not counted as part of the employee's income.
So, those who got bonuses have the following options:
(A) return the full bonus to AIG, in which case they will owe taxes on the full amount of the bonus anyway.
(B) donate the full bonus to charity, in which case the alternative minimum tax means they probably still have to pay taxes on all or most of it.
(C) keep the bonus and use it to pay state and federal taxes which -- if Congress passes the House's version of the punish-AIG-bill -- will probably exceed 100% of the bonus amount.
Y'know, I am not without sympathy for those who are angry that AIG's financial division employees still had a job and got fat "retention" bonuses (even if they'd quit) regardless of their performance at their job.
But the government response here leaves me truly infuriated. These employees didn't do anything but accept what they were offered for legal employment, and this after-the-fact "no, actually, give us back that $1,000,000 bonus or we'll throw you to the mob, plus you have to pay us an additional $280,000 or we'll jail you for tax evasion" is just nauseating. No one who hasn't been convicted of a crime should be subject to fines of 130% of income.
What a mess.
Then I read this.
Short version:
It is not possible, under current US tax law, for an employee to return income to his employer and have that money not counted as part of the employee's income.
So, those who got bonuses have the following options:
(A) return the full bonus to AIG, in which case they will owe taxes on the full amount of the bonus anyway.
(B) donate the full bonus to charity, in which case the alternative minimum tax means they probably still have to pay taxes on all or most of it.
(C) keep the bonus and use it to pay state and federal taxes which -- if Congress passes the House's version of the punish-AIG-bill -- will probably exceed 100% of the bonus amount.
Y'know, I am not without sympathy for those who are angry that AIG's financial division employees still had a job and got fat "retention" bonuses (even if they'd quit) regardless of their performance at their job.
But the government response here leaves me truly infuriated. These employees didn't do anything but accept what they were offered for legal employment, and this after-the-fact "no, actually, give us back that $1,000,000 bonus or we'll throw you to the mob, plus you have to pay us an additional $280,000 or we'll jail you for tax evasion" is just nauseating. No one who hasn't been convicted of a crime should be subject to fines of 130% of income.
What a mess.
