Interesting development indeed.
Michigan Democratic Rep. Gary Peters introduced a bill in the House of Representatives to impose a 60 percent surtax on bonuses over $10,000 at any company in which the U.S. government has a 79 percent or greater equity stake.
This is in addition to the usual income tax rate.
Its directionally not bad, but the level of ownership by the Federal government should be 51%, not 79%. And stiff penalties for management bonuses at any institution receiving TARP funds or FED support above a certain level are needed.
The reason that the Obama Administration is in this box over the contracted bonuses is that Geithner and Summers refused to take AIG into bankruptcy reorganization.
Why?
Perhaps it has something to do with the enormous exposure that Goldman Sachs had to AIG. Lloyd Blankfein, the chairman of Goldman Sachs, was the only non-government or Fed official who was at the meeting at which this bailout was decided.
Yes, the AIG bonuses are an enormous, shocking scandal.
But it is only the tip of the iceberg. Recall that we predicted early last year that the patsies and scapegoats would be thrown off the back of the getaway truck to try and satisfy the angry mob once the magnitude of the frauds became apparent even to the average person.
Well we are there, and they are throwing patsies out the window with greater noise and flourish, because, in short, the angry mob is getting louder, and they are afraid.
Reuters
Congress eyes bonus surtax amid AIG outrage
By Kevin Drawbaugh
Tue Mar 17, 2009 1:17pm EDT
WASHINGTON (Reuters) - Some members of the U.S. Congress on Tuesday proposed slapping a surtax on bonuses paid to executives at American International Group Inc, amid outrage over the large payouts.
Michigan Democratic Rep. Gary Peters introduced a bill in the House of Representatives to impose a 60 percent surtax on bonuses over $10,000 at any company in which the U.S. government has a 79 percent or greater equity stake.
"Currently, AIG is the only company that meets this threshold," Peters said in a statement. "The legislation I'm proposing will get taxpayers their money back.
President Barack Obama on Monday expressed "outrage" about $165 million of bonuses to employees of AIG, once the world's largest insurer, now being bailed out by the government.
Senate Banking Committee Chairman Christopher Dodd said Peters' approach was "worth pursuing as an idea."
California Democratic Rep. Brad Sherman, a House Financial Services Committee member with Peters, said he favors "a tax law to impose a substantial surtax on excessive compensation paid to executives at bailed-out firms, especially AIG."
New York Attorney General Andrew Cuomo has said he will subpoena AIG for more information about the bonuses, including the names of the recipients.
Peters said it was "beyond outrageous that the very people who brought AIG to its knees and helped create the current financial crisis are scheduled to receive hundreds of millions of dollars in bonuses while tax dollars keep their company afloat."
Iowa Rep. Bruce Braley and Connecticut Rep. Joe Courtney, both Democrats, released a letter signed by 90 members of Congress to Treasury Secretary Timothy Geithner urging that planned bonuses to AIG executives be stopped.
Braley also said in a statement that he introduced legislation "to increase the tax rate on any bonuses awarded by businesses receiving government TARP funds, including AIG."
New York Democratic Senator Charles Schumer warned AIG employees to return the bonuses they are receiving or face being slapped with a major tax on those payments.
"They should voluntarily return them (the bonuses). If they don't, we plan to tax virtually all of it," Schumer said.
