So does this make everyone happy?

[DougViages]

A little revolution once in a while is good for a republic.

[cashbalancetrouble]

The house of reps has elections often enough that they must all grand stand. My Rep. Kucinich was hiding in all this mess as he knows it will not play well in his bid for the prez position in 2012. The Senate will never pass this.Who else got the impression that PREZ-O has let the house prove just how stupid they are with this measure. I think within a week he will comment how these AIG people worked hard since last April to keep AIG afloat and right the course of a troubled company. PREZ-O already said it really wasn't AIG only at fault. AIG packaged up bad mortgages and sold them to make money. They didn't create the bad mortgages. Fannie and Freddie did and MOODY's etc rated them as AAA securities. This story will lose it's legs on April 1 when the Defined Benefit Pension funding failures hit the news. Many more will be slapped in the face with the sting from a system in failure.

[Hal3]

Very nice analysis.

It is the unintended consequences that get you every time.

I have another thread on that but I have to go to w**k right now.

Quote:

Originally Posted by . . . Yrs to Go It's certainly a bill full of unintended consequences. Not surprisingly the bill will encourage bankers at TARP firms to quit their jobs. What is surprising is that the legislation is so poorly written that it will actually encourage the banker's working spouses to quit too. Consider the hypothetical banker who makes a $100K base, got a $400K bonus in January and has a working spouse making $150K in an unrelated industry. Now assume three different scenarios 1) they both work the full year 2009. 2) He quits at the end of March and doesn't work for the rest of the year. 3) They both quit in March and don't work. This is how much they'd earn in 2009 (after the new tax, but before normal taxes) under each of the three scenarios . . . 1) The both work . . . $290,000 2) He quits . . . $282,500 3) The both quit . . . $271,250 So the benefit for both of them working the next 9 months is $18,750 before ordinary taxes. In a way, the bill claws the spouses income back too.

[FinanceDude]

Quote:

Originally Posted by dex Is it even legal? Can there be a special tax on a person just because the company they work for took money from the government? Also, the article questions the reto aspect of it. I'm guessing it will be thrown out in court and we will not hear about it.

Well, the govt THINKS they can, and that's all that matters....... Bottom line, WE own 80% of AIG, so they are not really a private sector company anymore......

[ziggy29]

In reality, the government seems to keep changing the rules as it goes along, trying different things to see if something works, and to retroactively try to change deals.

It reminds me of a giant, high-stakes game of Calvinball:

Calvin and Hobbes - Wikipedia, the free encyclopedia

[FUEGO]

I think we should tax future earnings of individuals receiving a mortgage bailout at 90% until they have repaid their debt in full plus taxes due on forgiveness of debt. I also think they should confiscate the salaries of all senators, representatives and presidents until this financial quagmire is resolved.

[harley]

Quote:

Originally Posted by OAG With all of the exposure maybe the Senate will kill this thing!

I hope so too. That's the job of the Senate, to add rational processes to the grandstanding antics of the House. Their record isn't so good these days, though.

[eridanus]

Quote:

Originally Posted by . . . Yrs to Go Consider the hypothetical banker who makes a $100K base, got a $400K bonus in January and has a working spouse making $150K in an unrelated industry. Now assume three different scenarios 1) they both work the full year 2009. 2) He quits at the end of March and doesn't work for the rest of the year. 3) They both quit in March and don't work. This is how much they'd earn in 2009 (after the new tax, but before normal taxes) under each of the three scenarios . . . 1) The both work . . . $290,000 2) He quits . . . $282,500 3) The both quit . . . $271,250 So the benefit for both of them working the next 9 months is $18,750 before ordinary taxes. In a way, the bill claws the spouses income back too.

Explain this to me.

1) is obvious
2) He has $25k from salary and $400k from the bonus. After the 90% special tax, he has $65k. She makes 150k. Total is $215k.
3) He makes $65k and she makes $37.5k. Total is $102.5K.

Or is that assuming the income limit of $250,000 is before the bonus? Or that only >$250k is taxed at 90%?

[youbet]

Quote:

Originally Posted by socca we've placed too much power in the hands of the clueless.

Nicely put.

[unclemick]

Hmmm - not to be a smart ass(well yes I couldn't resist) but it's all our fault - as shareholders we are supposed to guide management.

And as voters - well you know.



As Dr Phil would say - how's that working out.

heh heh heh - 'May you live in interesting times' is getting curiouser and curiouser - er something.

I predict at 5-10 years into this current unpleasantness - people may start to get grumpy - I'd better have my Curmudgeon Certificate insured.

[Gone4Good]

Quote:

Originally Posted by dex Is it even legal? Can there be a special tax on a person just because the company they work for took money from the government? Also, the article questions the reto aspect of it.

From what I've read most folks seem to think this would be legal. There is some question over whether this particular tax would be a "bill of attainder". I don't know.

In terms of it being retroactive, it really isn't. The bonus payments were made in 2009 and the changes are to the 2009 tax code. For tax purposes it doesn't matter that the bonus was "earned" in the 2008 calendar year if it was paid in 2009.

[Gone4Good]

Quote:

Originally Posted by eridanus Explain this to me. 1) is obvious 2) He has $25k from salary and $400k from the bonus. After the 90% special tax, he has $65k. She makes 150k. Total is $215k. 3) He makes $65k and she makes $37.5k. Total is $102.5K. Or is that assuming the income limit of $250,000 is before the bonus? Or that only >$250k is taxed at 90%?

The reason this works the way I suggested is that they exempt $250K of income. But the way they do it is by exempting $250K of "Adjusted Gross Income" (a.k.a. income from all sources, not just bonus income). So in case number 2, he earns $25K salary, $400K bonus, and she earns $150K salary for a total of $575K. The first $250K is shielded, leaving $325K of "bonus income" subject to the 90% tax. $250K + $325K * 10% = $282.5K. In the case where they both quit, total income is $462.5K, $250K of which is shielded, so the take-home amount is equal to $250K + ($462.5K - $250K) * 10% = $271.25K

The practical effect of this scheme is that many people will find that they've already received all of the money they can possibly earn this year. So why bother showing up for the rest of the year?

Another "interesting" factoid of this asinine formula is that a back office worker making $60K who got paid a $20K bonus will still see his bonus taxed at 90% if his spouse makes enough to put the couples AGI above $250K.

[Darryl]

Sorry, I have't seen much news as I've been busy at work.

Did I just see the some politicians on TV who have spent trillions of dollars with hundreds of millions, possibly in the billions of dollars in earmarks, pork, waste etc. all outraged that 165 million will be paid to people who did a poor job? Did that same handful of people vote to take property away from other americans? Sure hope they don't get upset with me or my company or my industry at anytime during the next 50 years.