Help me understand??

United States
March 20, 2009 12:42pm CST
Congress Moves to Slap Heavy Tax on Bonuses.http://www.washingtonpost.com/wp-dyn/content/article/2009/03/19/AR2009031901542.html?wpisrc=newsletter This seems to be causing people to think that everything is now hunky dory but my problem is- These bonuses have been received this year so they will not be due until next year's IRS tax returns in April 2010. So it that not giving these people plenty of time with the money already in their pockets to hide it someway or to skip the country. They could perhaps also do some clever investing and make a bunch of money on their ill gotten gains. Could the government nor just demand the money back now?
3 people like this
8 responses
@owlwings (39872)
• Cambridge, England
21 Mar 09
I don't think that taxing the bonuses is either helpful or wise. I appreciate that bonuses are often written into contracts and therefore it isn't quite as simple as some people think to not award bonuses. They should actually be called something different, in my view. It is likely that taxing them is the only 'legitimate' way of making sure that the money is returned to the Government and it is a move which 'looks good' to the majority (those not receiving the bonuses). I do agree that moves like this are done with an eye to popularity but it is a sad and inevitable fact that, especially at the moment, the Government (and Obama in particular) need to be seen to be doing something. Whether 90% of the bonuses awarded is returned now or later is really neither here nor there: the amount received from the tax is a mere drop in the ocean. On the whole, I tend not to feel too cynical about it. Taxing at 90% is one way of returning the money to its 'rightful' owners and it's a 'Robin Hood' manoeuvre. In actual fact what worries me more is that it sets a precedent for taxing anything at any level at any time. The fact that it doesn't immediately affect me (I am neither in receipt of a bonus nor an American citizen) is beside the point. In essence it is a totalitarian and undemocratic (and therefore a Right wing) move from someone who purports to be less right wing than the opposition. It also gives the nod to other socialist governments (such as mine) to follow suit - not that they exactly need a lead: they have already quite a history of such behaviour. Yes, it's very likely that these people will do some sensible investing and return their 'talents' to the government as requested when the time comes - and thank you very much for the free loan of funds to invest! That is life (and common sense would dictate that you make the best of what you have while you have it). You have actually only to look at the media reporting on the expenditure of the inordinately rich (such as a recent divorce case) to realise that your and my conceptions of 'money' is not the same as that of those who appear to have plenty. For us a dollar represents how much we are worth per hour and how much it will buy us of food, shelter and entertainment; for them, all of those things are a given. Their dollars buy something quite different - status, kudos ... whatever (I am not actually sure). Their second mansion or boat in the Bahamas or bevy of servants is not something they have simply because they can afford to, it is about as much part of their way of life as the table cloth on your table or the flowers in your vase. The fact that it takes what looks like the same kind of dollar to maintain that lifestyle is actually a smokescreen. Now, I am not condoning the lifestyle of those people. All I am saying is that the dollars they use to maintain it are different from the kind that you take to the grocery store or pay the bills with.
1 person likes this
@owlwings (39872)
• Cambridge, England
21 Mar 09
The nitty gritty of economy is not the availability of money but the movement of it. Someone with a high income actually moves more money than someone on the breadline. In other words, they are contributing more to the economy that you or I.
1 person likes this
• United States
21 Mar 09
Thank you for your extremely interesting response.
1 person likes this
• United States
26 Mar 09
You are indeed correct about availability versus movement, economics is hard to understand especially on a large scale. But you have to consider that wealthy people may move more money one against one then you or I could, but there are a lot more people like us than there are of the wealthy. Trust me the wealthy people are not keeping Walmart in business it is you and I. The wealthy in turn keep Bloomingdale's and Macy's in business. We all have a niche to fill, but when economics fail the Walmart supporters get hurt the most.
@xfahctor (14130)
• Lancaster, New Hampshire
20 Mar 09
It goes more like this: The real worry is the fact that what congress just did was so blatently ilegal and they did it using the anger that they managed to generate by pointing fingers at a "monster" they created to shift blame to, and then having the peasants charge the monster's castle with torches and pitch forks, getting their agenda passed and covering their tracks in the process. Then to show the peasants they are the "peoples governemnt" they punish that evil monster publicly and the public is so greatfull, they don't care that a very dangerous and precident setting thing has taken place with that punishment, that has opened the peasants up to the same punishment someday should they become the next "monster"
1 person likes this
• United States
20 Mar 09
Thank you. That helpd I did not know it was actually illegal what they are doing
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@xfahctor (14130)
• Lancaster, New Hampshire
20 Mar 09
your welcome. Yes it is incredibly ilegal and unconstitutional, first, trying to force aig to break contracts they already aproved and then even more by trying to retro-tax and even more that it was targeted at a specific group for punishment, this was one of the exact big things that started our revolutionary war and exactly why the founders put things in the constitution to forbid it, king george was notorious for using retro-tax as punishment.
1 person likes this
@Lakota12 (42684)
• United States
21 Mar 09
you would think that they would call it back NOW!
1 person likes this
• United States
21 Mar 09
That seems to be their biggest problem Lakota...they do NOT think.
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@Lakota12 (42684)
• United States
21 Mar 09
they sure DONT!
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@suspenseful (40316)
• Canada
20 Mar 09
Why not bonuses the same way one taxes bank interest? Here in Canada bank interest is taxed at a higher rate then income you get from working. And well if they tax the bonuses that would get the ones who get them to really worry, like I used to do and made sure I did not save enough to get taxed. And are the bonuses legal? I mean if they are not, they should give them back. And eighty percent is almost as good as taking it back. These businesses have taken money from the American people and caused the latter to struggle to keep body and home together. It is a crying shame that there are leaches not only in the bottom of society, but also at the top. I can see nothing hunky dory about this. I can see people shaking their heads and thinking "if they had not gotten this money, we could have not had to choose between rent and food this week.:
@xfahctor (14130)
• Lancaster, New Hampshire
20 Mar 09
The problem is that the bonuses were authorized by the same congress who is now turning the public against aig. they actualy put language in the aig bail out deal tha authorized them , they are legaly ocntracted bonuses that congress had no problem with untill it leaked out, then suddenly they began pointing to aig and screaming "theres the villans!" when they had in fact given the ok for those same bonuses to be in the contract. A contract CANNOT be broken by the government anyway. The other problem is that it is a direct violation of our constitution to enact a law or impose a tax AFTER the fact, especialy one that is designed to punish a particular group or person. it was one of the major causes of our first revolutionary war.
2 people like this
@suspenseful (40316)
• Canada
21 Mar 09
That would stink. So I guess they were saying in hind sight, they should not have gotten the bail out anyway. I guess it is what we used to call "Indian giving" when you gave something and took it back. I guess they did not cover their bases and wrote "you cannot use this money to ===== (and the list of no- nos, continue) but even that would not be right. The trouble is when giving bail outs or bonuses, there are those who abuse them. But as far as I can see, a bonus is for a work well done or above and beyond the call of duty and whereas with a bail out, you are expected to boost your business, upgrade the plant, etc. with a bonus you can take a trip around the world or invent a giant scratching machine if you wanted.
1 person likes this
@jonesy123 (3950)
• United States
20 Mar 09
First off, it was not really quite kosher what congress did there. Besides that you are right, it's not due till next year and clever investing especially in this market will indeed provide them with extra profits on that money. Heck a simple savings account will provide them with gains. To top it off, people think that it's 90%, well not really. We all have tax deductions. All these people incurred losses either with investments (okay, then they don't need to invest this money this year, lol, or they won't make up for their losses) or other business ventures (most of them have something on the side in terms of consulting and such. They have mansions and other things that offer tax deductions. So 90% won't be 90%. This is just all smoke and mirror once again to show how Obama will pull for us;)
1 person likes this
• United States
20 Mar 09
Thank you. I came to the right place to get answers. You have all made it really clear to me as I am not very good in finances but I had a feeling Obama and his crew were up to some kind of trickery to fool us.
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@rodney850 (2145)
• United States
20 Mar 09
Whiteheather, I have to agree with Xhahctor! Even though I believe the bonuses are in poor taste and a hideous use of yours and my money, democrats in congress opened the door for this wide open by the removal of language from the "bail-out" package that would have prevented it. The REAL criminal thing here is the after-the-fact punitive taxes and the precedent they set. Firest and foremost, punitive taxes are unconstitutional as X pointed out in one of his discussions yesterday. Second, if this act stands, what is to stop congress from punishing other groups of people at their discretion? Let's say you make XXX amount of BIG BUCKS this year and like a good citizen you pay your normal taxes and your done. Next year, congress has made such a complete mess of the economy that many more people are jobless and suffering and congress wants to know just where they can get some relief funds. The see you and many people like you made the XXX BIG BUCKS and just paid regular taxes and well, that was just plain greedy so for being greedy they punish you and all these other people by re-taxing you, after the fact. THAT is the precedent that this act sets. If I were one of the people getting one of these bonuses, before I would let the government get hold of one cent, I would donate every penny to charity! At least I would then have a reasonable idea that the money would go to good use, not to line some politician's pocket.
1 person likes this
• United States
20 Mar 09
That you Rodney I knew I would get some great responses..and I have. Now I see what is going on. I just knew that with Obama and his cronies at the helm there had to be sound kind of monkey business going on.
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@winterose (39918)
• Canada
21 Mar 09
well I think they are thinking that some people have already spent it like going on a trip or whatever so it wouldn't be prudent to ask for it back, I think they are not punishing the people who got it but want to punish a.i.g. the company, for what I understand, i could be wrong though.
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• United States
21 Mar 09
To my way of thinking the government should never have given the money out....you know this was going to happen yet they did not make any of those famous earmarks to prevent this kind of misuse of the money. All this bailout bill is doing is raising the overall deficit and guaranteeing that we run in the red big time for at least the next ten years. They will of course blame it all on Bush, but some people are beginning to see the light. I am not sure how long this country can survive under this kind of leadership.
• United States
21 Mar 09
I do not think it will be long at all. I also think it will take a very long time to recovered. Of course the wealthy such as Obama still have their big bucks stashed away.
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