IRS may tax 100% of AIG bonus...

[salinn]

Outraged Congress looking to recoup AIG bonuses through new taxes - Yahoo News

Love this. Full Link here - here are the highlights:

In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money

Comments

[allyphoe]

Over a million is already non-deductible, unless it's performance-based. IRC 162(m). Which is why they all get bonuses.

[salinn]

I guess I just don't see how these could be performance-based if they are only able to pay them because they were bailed out? That doesn't scream "good job" to me.

[kowh]

Your solution seems better than most that I've heard.

I'm not sure what sorts of employees are getting all of these bonuses, but assuming it's a cross section of the company there are people at the bottom who likely could really use the extra money. Most of the remedies proposed in letters to the editor would hurt these people the most, so I hope that if any action is taken it focuses on the obscene bonuses not the fact that people are getting bonuses.

One possible solution off the top of my head is to cap the bonuses at $50k (or some other figure) per person. That would cut the overall cost of the bonuses by a fair bit, but still make sure that the people at the bottom get their full bonus.