Punished Enough

[rowyn]

I 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.

Comments

[elusivetiger.livejournal.com]

Yet another side effect of essentially nationalizing big chunks of the financial industry - government-induced lunacy, responsive to polls, the phase of the moon, and what Obama or some senator ate this morning.

[terrycloth.livejournal.com]

These employees didn't do anything but accept what they were offered for legal employment,

Well, they did do something else -- they bankrupted the country through their negligence, etc. Only losing 130% of one year's bonus is a pretty sweet deal compared to how screwed people usually get for screwing up at their job so badly that people get hurt.

[verminiusrex.livejournal.com]

What I think many people are forgetting is that you can pass a law and enforce it after, but it is much more difficult to pass a law and enforce it retroactively (I want to say it's even unconstitutional, but unless I can find the part to back me up won't make that claim). So trying to pass laws that punish what we consider very irresponsible use of bailout funds is great for political soapbox shouting, but I have a feeling it won't hold up under court challenges.

Rather than spend millions of dollars trying to punish people that got a bonus, I'd rather spend the time and energy trying to prevent it from happening again in the future. Our government has a bad habit of spending too much time trying to look like they are doing something about a perceived problem rather than doing stuff that actually needs to be done here and now, without a spotlight on them.

[detroitfather.livejournal.com]

I agree with you.

(shakes her head in disbelief)

[tahkhleet.livejournal.com]

Well, the point that trying to punish people by statute instead of formal prosecution is wrong...that holds water I'd say.

Except for one thing.

In this case, we have no hope of seeing justice done. Look at what Obama's doing. Do you get a strong sense that he's a hard hitting reformer? I don't. He hasn't made a SOUND about even going as far as Bush the Elder. You know, that amazingly progressive president who oversaw damage control on the S&L crisis. A crisis that looks a lot like a dress rehearsal for this one... "How much can we get away with ? that much. ok...."

At best, the US has descended into a soft fascism. Obama is no better than Bush. Why else would he insist on upholding the precedents regarding the invincible executive which Bush tried to ram through? The slate legal column said this was absolute nonsense. So Obama has no excuse as a so called populist and progressive but to state that this stuff is wrong and outside any pale of the law.

So I accept the AIG bonus flap is a diversion, like a matador's cape. I accept that it is bad governance to deal with it this way. But given that the US (and by proxy, Canada, since our economy is wedded to yours) has officially gone to Hell in A Handbasket...given I anticipate no basis for it recovering in my lifetime (given the systematic culture of delusion, corruption, and arrogance in common through the business and political elites)...I think I'll enjoy the cape flapping. Its enjoyable. Sure, I'm about to get run through by a sword, but I know nothing I can do is going to change this now. There's too much inertia.

Besides, if my life has to be destroyed, I want to at see at LEAST a year or two's wealth stripped from the triggermen. Sure, it won't fix anything nor is it fair. But at least someone aside from me is going to get hurt. In a better world I would be hoping for more. But it is clearly futile to hope for that. I cannot believe that things actually have slid this far. Welcome to the Revolution of neo-oligarchy.

In case that seems too defeatist...

[tahkhleet.livejournal.com]

http://www.rollingstone.com/politics/story/26793903/the_big_takeover/print

Its not the only story because there's just so many bad things happening at once. But this tells a huge part of it. Brad Hicks and Solarbird have relayed lots of data too, none of it good. They're both pretty objective. The most optimistic thing Brad will say is he doesn't think we'll have Mad Max. That would reassure me except that I die if they take away the social support services....so whatever happens to THE world, _my_ world is over in the next year or three.

[fortyozspartan.livejournal.com]

I have a feeling this has more to do with class-warfare than anything else.

[jordangreywolf.livejournal.com]

I keep hearing different accounts, and if I talk to different friends, no matter what I last read, I'm wrong: The AIG people being villified ARE responsible for this mess. No, the people being targeted AREN'T responsible, and folks who were hired for the purpose of cleaning up the mess that others made are being villified, targeted, etc.

Whatever. I'm unlikely to get properly informed by reading the news.

However, as a matter of principle, I am concerned by anything that seems like a lynch mob mentality - death threats, demands that each and every one of these "AIG execs" gets named, a lack of clarity about exactly who those AIG execs are, and what they did that's worthy of unleashing the mobs on them. We're mad at "them." I'm not sure that if we got a list of names of "them," that it'd be immediately clear that we've got the right "them." Who's that, anyway? Anybody who works at AIG right now? Only those who work in a certain department? Do we exempt certain people who were hired after a certain point, or are they lynch-worthy, too, because nobody deserves to get paid that much money?

It wasn't too long ago I was reading up on Robespierre's Reign of Terror (remember my "Bayonets, Buttons & Blood" French Revolution figure flats project?) and suddenly it feels contemporary and relevant. (Wow. I heard Madame LaFarge's name invoked in the news, and I actually knew who she was!)

Reading some comments these days on blogs, I might get the impression that we're suffering from another Great Dust Bowl, everybody's hitting the bread lines, people are jumping out of windows, et al., and therefore it's time to get those torches and pitchforks out and go after anybody who's got too big of a salary for our liking.

Anyway, I am glad (but not surprised!) to see that you're one of the level-headed folks NOT hopping on the bandwagon o' outrage.