We figured that Michigan’s politicos would join the fray in criticizing the contractually-obligated AIG bonus deals. Rep. Gary Peters from Bloomfield Township has got it all figured out: Tax these bonuses at 100%.
Seems he wants to amend the Internal Revenue Code of 1986 in his plan to tax these folks. To single out a business under this code is going to be difficult, since the code is explicit in supporting the bonus as a means of compensation. These employees waived other modes of pay and this is, essentially, their salary just as our weekly paychecks are ours. We believe in honoring deals, no matter how distasteful they might be. And who is speaking out about the lack of due diligence on the government's part before handing over the money to AIG?
It would be like someone saying that the workers at General Motors, since it has been the recipient of federal funding, should be subject to a special tax because they are overpaid. One of my esteemed blogging peers has laid that out quite proficiently.
But while that is hardly be a cool thing to assert here in the U.S., folks in Canada are gutsy enough to say just that. And by the way, where was the outcry to tax GM chief Rick Wagoner's pay package last year worth $14.9 million, despite a $30.9 billion annual loss and billions in government aid? The pay was his contractually-obligated salary. But surely it was excessive given his performance.
AIG struck a deal that and has to keep that deal or we will end up paying the bonuses plus legal fees.