Thread: The government giveth, and the government taketh away

Several companies where the government injected bailout money paid out huge bonuses to their CxOs, much to the chagrin of the working people.
The gov protested but the board decided to go ahead because they felt entitled, and needed to keep up with their US counterparts

But in an outbreak of common sense, the government passed a bill to tax those CxO bonuses for 90%

Three cheers for the IRS

I think I'll just be a bystander on this thread...maybe.

talk about the dreadful nanny state...

"The time is fulfilled, and it is at hand: repent ye, and believe in the gospel!"

I am not in favor of taxes on bonuses.

But considering that this was government money to begin with, and paid out only to help bail out certain financial instituations, I think it is inappropriate for the board to use the money to pay themselves big bonuses as a reward for their incompetence.

Bear in mind that this is not a general tax on bonuses. It's a tax on bonuses paid out with bailout money.

I completely agree. If executives can't regulate their own behaviour and continue to award big bonuses with impugnity, using public money, then the state has to step in and take control. Nanny state or not, this was the right decision.

And the message to such businesses couldn't be clearer: you have a choice, we bail you out with taxpayer money, or you can go into administration and see if you fare better with the dogs tearing you apart. If you choose the former, we have a say in how you use our money.

(Of course, on this side of the pond, when a business goes bust it goes bust, none of this 'pretend' going bust CHapter 11 malarkey.)

This is one of the few instances where i can smile at that sort of taxation!
Prepare yourself for the bosses awarding themselves 40 mill bonuses to get around it!

What I'm reading is that this is all just politics. The bonus money is 0.1% of the total bailout. The politicians are making a big stink about the bonuses to distract attention from the fact that they haven't told us where the other 99.9% of the money is going.

I agree the money itself is not too important in the greater scheme of things.
But it sends a strong signal to the execs that noone is going to allow them to enrich themselves even further as a reward for landing the company in the ****, with money they requested specifically to get the company out of the ****.

Originally Posted by Bruno

I am not in favor of taxes on bonuses.

But considering that this was government money to begin with, and paid out only to help bail out certain financial institutions, I think it is inappropriate for the board to use the money to pay themselves big bonuses as a reward for their incompetence.

Bear in mind that this is not a general tax on bonuses. It's a tax on bonuses paid out with bailout money.

+1 that is the kicker. What got me was when the gov said that for those institutions that took bailout money the CEO's pay would be capped at five hundred thousand a year and the companies got mad. Some of them wanted to opt out and return the bailout money to avoid the constraint. Can you imagine what you could do with $500,000 per year ? I would have a razor collection like Lynn and Don.

I think the moral of the story is that given the chance, the government will do its very best to control what happens to your wealth; so do your very best to provide for yourself and others and to keep legislated charity out of the picture as much as possible

[Edit: The dilemma is how to obey all the laws on the books all the time and remain profitable!]