Punished Enough
Mar. 26th, 2009 02:43 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
rowynI 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.
no subject
Date: 2009-03-26 08:00 pm (UTC)Doing your job in good faith according to the principles of your legitimate profession isn't usually a crime.
Frankly, nothing I've heard about the current economic disaster persuades me that AIG employees have done any more damage than Rep. Barney Frank's sponsorship and protection of Fannie Mae and Freddie Mac -- and he's still got a job. :6
no subject
Date: 2009-03-26 08:49 pm (UTC)So when you hear that the people responsible for the danger are going around and pocketing some of the money that we're trying to use to keep their smoldering mess from killing us all... yeah, you don't have much sympathy if a technicality in the tax system means they might lose a little money (compared to how much they've been paid).
If we *did* have sympathy, we'd write another loophole into the tax system to keep them from getting double-charged. That's what most of the loopholes are there for.
Not to mention that the article implied that they wouldn't even do that -- they can deduct it as a business expense and OH NO it might take them a few years before they've actually broken even.