90% Tax on AIG bonus, should UK follow?

Generali

I think it's a great idea but hard to put into practice.

The P60 in the UK and its US counterpart (W2 I think) doesn't differentiate between base salary and bonus. Both are treated as income. This will make it very hard to police.

amcluesent

Clown's sock-puppet Darling will announce retrospective legislation on bonuses and pensions in the budget, claiming it'll be just for the 'fat cats' like Fred the Shred. Then Labour will apply these laws to steal the pension of anyone earning over £25,000.

bubblesmoney

Generali wrote: »

I think it's a great idea but hard to put into practice.

The P60 in the UK and its US counterpart (W2 I think) doesn't differentiate between base salary and bonus. Both are treated as income. This will make it very hard to police.

the new legislation can make it mandatory for the employer to deduct the tax at source for such bonuses. any fraud on this count should carry mandatory jail sentences. i am sure the people in the wage dept will think twice about their own skins if they plan on forgetting to deduct the clawbacks at source.

abaxas

When given the choice between civil war and this, it's not hard to make that decision.

RecoveringAlcoholic

And The Fat Cats Just Get Fatter.



Let them eat cake.
Attrib: Marie Antoinette, Maria Theresa.

bubblesmoney

i think it is important to legislate similarly.

every organisation which is thinking about needing bailouts will be trying to protect the bigshots in it by wording the bonus / severance pay / pensions contracts to make sure it is compulsory. they will be doing it all the more now if they anticipate needing bailouts.

in the recent treasury select committee hearing the fsa said that the govt had to pay the contractual compulsory perks in bailed out institutions like rbs etc. whats to prevent these people who ruin the too big to fail companies from wording their bonus and severance and pensions contracts in huge money terms and then seek bailouts????

the only way to tackle such a scenario is by such clawback tax legislation targetting bonuses and pensions and severance pay above certain amounts and protect the institutions from getting ripped off by the senior executives who decide each others pay contracts under you scratch my back and i scratch yours tactics to the detriment of the company and shareholders and tax payers.

also it is important to not have a cut off date to exclude contracts signed before a certain date like tax cheat timmy seems to have engineered in connivance with house finance committee chairman Dodd in the usa at the time of drafting the bailout legislation. now it has been exposed and both seem to be facing the music as it was because of their manouvering AIG was allowed to give bonuses. the AIG derivatives branch is based in legisator dodds constituency; no wonder he agreed to amend the wordings on timmys pressure; this is out in the press now and watch them squirm to give excuses why they amended the bailout legislation final version.

all bonuses, severance payouts, accelerated pensions etc above certain amounts at failed institutions needing govt bailouts should have punitive taxes irrespective of when the bonus / pension / severance pay contract was signed, to avoid regulators favouring special friends by putting in cut off dates.

beaujolais-nouveau

You couldn't make it up.

NY Times
19 March 2009
A.I.G. Sues U.S. for Return of $306 Million in Tax Payments

A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year.

http://www.nytimes.com/2009/03/20/business/20aig.html?_r=1&hp

In other news, some of the companies bailed-out by Hank Paulson owed several million in overdue taxes. (I didn't save the link for that story but it was reported a few days ago.)

Bring back hanging for CEOs of banks and insurance companies.

bubblesmoney

bubblesmoney wrote: »

also it is important to not have a cut off date to exclude contracts signed before a certain date like tax cheat timmy seems to have engineered in connivance with house finance committee chairman Dodd in the usa at the time of drafting the bailout legislation. now it has been exposed and both seem to be facing the music as it was because of their manouvering AIG was allowed to give bonuses. the AIG derivatives branch is based in legisator dodds constituency; no wonder he agreed to amend the wordings on timmys pressure; this is out in the press now and watch them squirm to give excuses why they amended the bailout legislation final version.

all bonuses, severance payouts, accelerated pensions etc above certain amounts at failed institutions needing govt bailouts should have punitive taxes irrespective of when the bonus / pension / severance pay contract was signed, to avoid regulators favouring special friends by putting in cut off dates.

wrt the quotes in red colour above, please see the link below.
http://www.cnn.com/2009/POLITICS/03/19/aig.bonuses.congress/index.html

Congress last month passed the $787 billion stimulus bill that President Obama signed into law.
The bill had included a measure from Dodd to limit executive bonuses. But slipped inside at the last minute was an exemption for bonuses agreed to "on or before February 11, 2009." That allowed AIG to go ahead with its controversial extra pay.
For days, no one would say who was responsible for the loophole that let that happen.

also there seem to be investigations into the issue of bonuses while firms make losses. many states are doing this. is the uk even thinking about this issue ????
http://www.bloomberg.com/apps/news?pid=20601087&sid=avJwPOJehjeM&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5JHdEyAaec4&refer=home

knowledgepower1

Tbh I still cant get it in these developed countries, from my experience you only receive bonus if you ve made and surpass your budgeted profit figures. Here, when they are collapsing they still fight for bonus. Bonus for what?

vivatifosi

Whatever happens to the pensions, I'm disappointed that there aren't forensic accountants climbing all over RBS looking for fraud or negligence, I still can't believe you can get the biggest failure in UK corporate history without one or the other. Then throw the book at them, all of them.