mediapro

Congress' Handling of AIG Bonuses Is Shameful

Gentle author and posters.

I realize that this site is populated by the fabulously wealthy, but please look at what prompted the arguments from "realty chk", "responsibility" and "leftfield" before standing on the sanctity-of-contracts soapbox.

What made Tom Brokaw's "Greatest Generation" great was living through the devastation of unprecedented greed and plunder of our national treasure by the robber barons of the late 1800's, the monopolists, and finally an eeirily similar derivatives and leveraging gambit by no other than JP Morgan and Company and declaring through their sweat and WW II sacrifice -- never again.

Though some decry Social Security, the GI Bill and other depression/WW II era investments in our shared responsibility, it was this shared sacrifice IMHO that created our wealth as a nation.

What have we come to when one man for his labor makes 300, 400, 600 times the person who actually makes the goods or delivers the services upon which a company depends? The justifiable reaction to a $750,000 retention bonus as reward for having the ability to unwind a highly leveraged, wink-wink scam has an apt methaphor -- obscenity.

The path that we have traveled since the innocent post-war days should leave any of us ashamed that our country has come so dangerously close to the wastebin of history. The steady, yet persistently rising gap between the haves and have-nots; our ridiculous belief that by re-distributing middle class wealth up to the most priveleged under the Friedman/Laffer economic model; and passing along the risk until it reaches the greatest fool has made fools of us all.

Standing on the sanctity of contracts, citing the Federalists papers, and pity for the person who can obviously afford to give back $750 K and not feel much pain pales in comparison to the guy one paycheck from poverty. What is understandable is the rage and outrage from the rest of us who might be fortunate to make that amount of money in a productive lifetime.

Until we have a shared sense of outrage at our lack of concern for these innocents in this latest greed-fueled gambit, we will continue down a road that thankfully few honest, genuine people travel.

A More Modest AIG Bonus Proposal

Here's the data compiled by Greentech (below), a part of the energy group, though focused on non-polluting alternatives. The title of the article is "Oil Industry Subsidies for Dummies", and it presents a rather unbiased assessment of oil industry subsidies.

"The American oil and gas industry might receive anywhere between $15 billion and $35 billion a year in subsidies from taxpayers.

Why such a large margin of error? The exact number is slippery and hard to quantify, given the myriad of programs that can be broadly characterized as subsidies when it comes to fossil fuels. For instance, the U.S. government has generally propped the industry up with:

* Construction bonds at low interest rates or tax-free
* Research-and-development programs at low or no cost
* Assuming the legal risks of exploration and development in a company's stead
* Below-cost loans with lenient repayment conditions
* Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire
* Sales tax breaks - taxes on petroleum products are lower than average sales tax rates for other goods
* Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth)
* The U.S. Strategic Petroleum Reserve
* Construction and protection of the nation's highway system
* Allowing the industry to pollute - what would oil cost if the industry had to pay to protect its shipments, and clean up its spills? If the environmental impact of burning petroleum were considered a cost? Or if it were held responsible for the particulate matter in people's lungs, in liability similar to that being asserted in the tobacco industry?
* Relaxing the amount of royalties to be paid"

One example of how oil companies shortchange the American taxpayer:

XOM earned $7.6 Billion on domestic production in 2007 and paid $2.7 Billion in U.S. income taxes. Worldwide they earned $45 Billion and paid $23 Billion in foreign taxes. That's a 36% U.S. rate compared with a 52% rate foreign. That source is XOM's 10-K filing.

Additionally, the U.S. allows




On Mar 24 12:56 PM WayneS wrote:

> P.S. There are over 500 oil companies in the US, not three.

Did CDS Cause All the World's Ills? Confronting the Crisis Backlash

Please write an expanded article applying this metaphor!!!

An outstanding crtitique. BTW, I looked at the "DTCC" table. If that's what transparency means, then I'm opening up an FP unit tomorrow!


On Mar 24 04:14 AM Mbuna wrote:

> My impression of reading this- CDS's are a relatively recent drug
> introduced that has become highly addictive such that many addicts
> go through great and sophisticated lengths to explain the reason
> for their addiction. Case in point #1: "Allow banks to get regulatory
> capital relief on their loan books letting them free up capital."
> Translation- banks have a loophole on their capital requirements
> thus allowing them greater leverage and thus greater risk but also
> the possibility of greater profits. Case in point #2: "Allow banks
> to more efficiently manage credit risk." Translation- We don't have
> to be responsible! Let someone else be responsible so we can then
> get even greater leverage and greater profits!
>
> Geez, haven't we seen the result of this already? Why on earth would
> anyone want to go back there? Addiction perhaps? Banks actually worked
> before CDS's were around. This is just addict talk on many levels
> because CDS's are an artificial inducement into the market. Financial
> engineering of this sort ultimately serves only one purpose, greed,
> (while generally playing everyone else for a fool at the same time)and
> ultimately does not benefit the broader economy. And the proof
> of that statement has already demonstrated itself, in spades. When
> you can financially engineer a product whose purpose is obviously
> broad over many sectors of the economy I'll listen. Otherwise this
> is just a C(rack)DS addict scheming for his next hit using technically
> sophisticated language about how wonderfully the drug works. Ultimately
> it is a lie.

A More Modest AIG Bonus Proposal

I won't bother to correct your outrageous assumptions about income and tax payments, but if you want a balanced presentation of the annual subsidies enjoyed by big oil, follow this link. My $30 Billion annually was, as you will read, a rather conservative estimate.

cleantech.com/news/nod...

On Mar 23 08:45 PM WayneS wrote:

> Mediapro - Last year the "Big Three" oil companies combined to make
> $71 billion. They paid $169 billion in taxes. Where are the subsidies
> you are talking about? XOM paid $16 billion more in taxes than they
> made in the US over the past several years.

The Bonus Tax: The Redistribution of Both Wealth And Talent

If you want Facism, look in the rear view mirror. Facism is shredding the First and Fourth Amendments in an ill-defined "War on Terror". Facism is committing extreme rendition on American citizens. Facism is the right to go through anyone's emails, phone conversations, etc. on the suspicion of it being related to terrorism.

Even a staunch conservative like Bob Barr had enough of the putrid actions during the previous Administration. His performance during the much-too-late Impeachment inquiry last year spelled out in exquisite details the Facists who almost managed to destroy this country.


On Mar 22 10:31 PM User 187593 wrote:

> This situation is not humurous--it is facisist. Congress is doing
> nothing less than targeting a specific group group for persecution
> (banking employees) just as the Nazis targeted jews. The reason
> I say employees is that the test is household income, not individual.
> Imagine a $40,000 secretary who received a $1,000 bonus, who is married
> to a $210,000 non-TARP company executive. That secretary willed
> be taxed at 90%. IT'S NOT JUST THE FAT CATS!!!

The Bonus Tax: The Redistribution of Both Wealth And Talent

So, what's new with these tax cheats and persons that have enough money to hire tax cheating lawyers?

Any wonder why the average Joe is outraged? While the wealthy shelter their income through "legal" and nefarious means such as foreign "tax havens" offshore accounts, shell businesses, and illegitimate deductions posing as business expenses, the working stiff paying his/her honest taxes for an honest wage looks that who gets rewarded under our current system and who gets the shaft.

1. Reinstate Glass-Steagall. None of these shops (Citigroup, B of A, etc.) should have ever been allowed to dally in businesses about which they knew nothing. AIG has (had) 111,000 employees. It's an insurance company. How can it effectively manage its core business while allowing these geniouses to manipulate the financial markets with CDO's and CDS's?

2. Eliminate bonus structures altogether. Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top? Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 401k and I am only required to deal with the payroll effects of 60k.

3. Fix the tax code. Just a few examples:

A. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

B. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck.

C. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

C. Finally, would someone please explain to me why there is a ~$106 K cap on wage contributions to Social Security?

While we are all arguing about the validity of the clawback option, we are missing the larger point of just how egregiously the average Joe has been pummeled by a tax system that redistributes wealth from the working middle class up to the 2% Captains of America that continue to rape this country and its resources.




On Mar 22 03:35 PM Rob Viglione wrote:

> Increasing political hostility to wealth and productivity will have
> dire long-term consequences. Many people I know are actively getting
> capital out of the country, while others develop escape plans for
> themselves.
>
> This is not the America we have come to believe in. The social contract
> with our government is fast eroding.

The Bonus Tax: The Redistribution of Both Wealth And Talent

Perhaps you missed the news item reporting that 20% of these "retention" bonus babies left the company AFTER they got their bonus money.

Still comfortable with AIG?

Actually, your point is well-taken in one sense. This isn't about bonuses paid to a batch of AIG FP geniouses. What this sorry episode has exposed is the incestuous nature of our economic structure. Merrell takes the B of A (taxpayer donated) TARP/Fed-structured buyout and pays BILLIONS in bonuses. AIG takes TARP and pays off BILLIONS to Goldman, Morgan and others sitting on their insured obligations that the worthless AIG'ers wrote.

This madness will only stop when we admit that w/o TARP and TALF money, these financial giants would be bankrupt midgets sitting on worthless assets enough to torpedo the companies should they ever write down those assets.

Nationalize the financial industry, GM, GE, and every other company that has brought this ruin upon our country!


On Mar 22 10:23 PM User 187593 wrote:

> AIG bonuses were not based on performance. They were retention bonuses,
> paid solely on obligation to stay on the job and perform during 2008.
> Since the affected employees stayed throughout 2008 they deserve
> the benefits of their contractual commitments, which they fulfilled.
>

A More Modest AIG Bonus Proposal

Actually, unlike some commenting, I read the article. I would go along with the stock compensation scheme suggested by the Zack's writer. If they (the FP folks) are truly committed to righting their wrongs and unwinding their mess, then building the compnay back to a sustainable footing through a stock incentive makes sense for all of us.

As to your points about the best way to do this, you totally missed the point of the article. To use a silly alternative such as "the janitor" or "intern" is a false choice. The folks in the FP division are mostly living in other countries (the British bunch are the biggest majority). Why should they give a whit about a law that doesn't affect them?

DO you recall that nearly 20% of these bonus babies who got "retention bonuses" left the company immediately AFTER the bonuses were granted?

And if you are so concerned with protecting our taxpayer assets, then exert your energy towards something constructive. For five examples:

1. Reinstate Glass-Steagall. None of these shops (Citigroup, B of A, etc.) should have ever been allowed to dally in businesses about which they knew nothing. AIG has (had) 111,000 employees. It's an insurance company. How can it effectively manage its core business while allowing these geniouses to manipulate the financial markets with CDO's and CDS's?

2. Eliminate bonus structures altogether. Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top? Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 40k and I am only required to deal with the payroll effects of 60k.

3. Fix the tax code. Just a few examples:

A. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

B. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck.

C. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

C. Finally, would someone please explain to me why there is a ~$106 K cap on wage contributions to Social Security?

While we are all arguing about the validity of the clawback option, we are missing the larger point of just how egregiously the average Joe has been pummeled by a tax system that redistributes wealth from the working middle class up to the 2% Captains of America that continue to rape this country and its resources.

On Mar 23 04:42 PM fbcx wrote:

> Again, the talking heads and their lemming followers miss the point.
> Many of those bonuses were performance bonuses based on actual production.
> Whether the entire firm made or lost money is immaterial. Whether
> those people saw no future at AIG for reasons beyond their control
> and left, does not mean their bonuses should be returned. For those
> that were retention bonuses, lets put hipocracy aside for a moment
> and think like businessmen. You've got a BIG problem...$2.7 trillion
> of very complicated assets that need to be unwound and sold for the
> highest dollar amount possible in order to be able to pay back the
> $170 billion the government has loaned you. Who do you want doing
> that? The janitor, an intern (neither of whom can even spell derivative
> asset) or the people who created the damn things to begin with an
> probably understand them better than anyone else. These people know
> they aren't wanted at AIG (but don't kid yourselves there are plenty
> of private equity shops who would hire them in a heart-beat with
> very nice comp packages to help them filter through the inventory
> and buy the bargains), so how do you keep them long enough to unwind
> their mess? It doesn't take a Harvard MBA to know you have to pay
> them not to leave and to stay and power down the the shop while making
> as many saves as they can on the downside. I don't care which private
> equity shop they go to after they finish cleaning house, but I do
> need them to stay and clean house. If I have to I'll pay .00619%
> ($167 million) of the $2.7 trillion to keep them around and do that
> job as best they can. I would. If you are thinking like an investor,
> which you should since you just invested $170 billion of taxpayers
> money in this outfit, you would do the same thing and quit thinking
> like a vengeful idiot talking head on TV. Christ, no wonder this
> country is go F***ed up! We've got Senators and Congressmen acting
> like uneducated juveniles instead of guardians of our nations wealth
> and wellbeing.

Outing AIG's Bonus Babies: What's the Point?

Campbell,

You are an astute observer. The game of deffered compensation, bonuses, offshore tax havens, writedowns and other manipulative tactics are the same ones that most taxpayers will never enjoy.

Ask yourself, why should it be legal for one employee and employer (usually the self-employed and small business owner) to play by the rules and receive salaried compensation, while another employee and employer (usually large corporations) to avoid their share a taxes through these manipulations? IRS, are you listening?

While you're at it, why not ask anyone to explain to you why salary compensated employees with gross incomes above $106K/year and their employers are exempt from social security taxes for any sum above that amount?

I've asked the brilliant Captains of America, who seem to populate this site, that question in numerous posts and have yet to receive an answer, ANY ANSWER!


On Mar 22 01:24 AM campbell wrote:

> Did the financial products division in London operate on its own
> without knowledge of top executives of the risk they were taking(rogue
> trading) or did top execs okay taking these risks with the whole
> company so the traders were just following orders?
>
> If the company had not been bailed out with TARP and gone bankrupt
> would these bonus payments take precedence over other claims in a
> bankruptcy court?
>
> Did I read in another post that these bonus opayments were not based
> on performance but just a way of getting around paying with holding
> tax at an earlier time and actually regular compensation?

The Bonus Tax: The Redistribution of Both Wealth And Talent

The article is almost as humorous as most of the comments.

The one who wrote the violin music about the porr financial guy who has a bunch of unredeemable stock options, a taxed salary (OMG!) and a bleeding Grandmother lost in Europe was better than the afternoon soaps.

Let's get real folks. What these guys do, in the list of TARP companies provided in this article, is literally move money around for their living. Where's the equal outrage and concern for the working stiff who is now supposed to renegotiate his union contract to spare the poor Detroit idiots?

I for one am sick and tired of hearing the outrage over confiscation of ill-gotten gains while the smart people who populate this site can't seem to realize that the role of the financial sector is to provide capital for people who actually produce things.

The problem with our economic contstruct is that we are not doing enough to right the wrongs of a failed, simplistic, silly policy direction that we have suffered through for at least the past thirty years.

The introduction, ascendency and idolatry of Milton Friedman's brand of shock economics has done more to destroy the world's economy than any economic hypothesis in our lifetime. This is not just Reaganomics /Bushanomics, but the pitting of haves/have nots in a global play orchestrated through Milton's disciples within the IMF, World Bank, and governing neo-conservative world view since at least 1975.

Cutting taxes on the wealthy and re-distributing middle class income up to those captains of industry combined with wholesale deregulation and record deficits under Reagan, Bush I and Bush II, and conveniently leaving the $1 Trillion dollars of Iraq war spending off the books while the national debt ballooned from around $5 Trillion to $10.6 Trillion at last peek is an ingenious spin on what constitutes supply side stimulus, if not outright delusion.

Count the change left in your pockets, unless of course you are one of the few who benefitted from this latest episode of Shock Economics so popular with necons. I'll just ask you the same question Reagan used to ask: "Are you better off now than you were four years ago?"

If you're in the same boat as the rest of us, our "staying the course" has undeniably run the lot of us aground. If you have benefitted, then you're one of the lucky 2% that control 80% of America's wealth, completely comfortable that you'll ride out the storm until the next lunatic can covince most of the people all of the time into something completely counter to their own self interest.

Five Lessons from AIG and Merrill Bonuses

Options and Econ.

Nice head fakes and diversions, but the Corporate Captains of America and neo-cons can claim full ownership to this latest debacle. Just make sure you and poster "dcb" know who to train their 2nd Amendment rights upon.

The introduction, ascendency and idolatry of Milton Friedman's brand of shock economics has done more to destroy the world's economy than any economic hypothesis in our lifetime. This is not just Reaganomics /Bushanomics, but the pitting of haves/have nots in a global play orchestrated through Milton's disciples within the IMF, World Bank, and governing neo-conservative world view since at least 1975.

Cutting taxes on the wealthy and re-distributing middle class income up to those captains of industry combined with wholesale deregulation and record deficits under Reagan, Bush I and Bush II, and conveniently leaving the $1 Trillion dollars of Iraq war spending off the books while the national debt ballooned from around $5 Trillion to $10.6 Trillion at last peek is an ingenious spin on what constitutes supply side stimulus, if not outright delusion.

Count the change left in your pockets, unless of course you are one of the few who benefitted from this latest episode of Shock Economics so popular with necons. I'll just ask you the same question Reagan used to ask: "Are you better off now than you were four years ago?"

If you're in the same boat as the rest of us, our "staying the course" has undeniably run the lot of us aground. If you have benefitted, then you're one of the lucky 2% that control 80% of America's wealth, completely comfortable that you'll ride out the storm until the next lunatic can covince most of the people all of the time into something completely counter to their own self interest.





On Mar 20 03:39 PM Econ 101 wrote:

> Options,
> I dont understand either. I guess there are too many "good germans"
> out there. Afraid to criticize the corruption in congress and afraid
> of losing what they have. Hoping, like little children, that it
> will just go away. Or maybe or schools have produced so many incapable
> of understanding they dont know. KENNNEDYKID, for example.

Five Lessons from AIG and Merrill Bonuses

Uh, dcb.

I know that your heart was in the right place, but the Constitution doesn't speak to covering one's arms or leaving them bare. If you meant "the right to keep and BEAR arms", please consider the much-disputed purpose of the phrase. It's not about hunting. It's not about personal protection. The framers had a very specific intent when phrasing the 2nd Amendment.

The prefatory clause of the Second Amendment is a shortened version of language found in the 1776 Virginia Declaration of Rights, largely the work of George Mason. Similar language appears in many Revolutionary Era state constitutions. This Declaration states:

That a well-regulated militia, composed of the body of the people, trained to arms, is the proper, natural, and safe defense of a free state; that standing armies, in time of peace, should be avoided as dangerous to liberty; and that in all cases the military should be under strict subordination to, and governed by, the civil power.

As to your point upon whom to use your arms, the government was a player in this latest episode, but the real culprits have been plying their trade at least since the the end of WW II. Read John Perkin's, "Confessions of an Economic Hitman" and Naomi Klein's, "The Shock Doctrine".

If you are ready to take up arms now, just wait until you see who are the real culprits!



On Mar 21 10:43 AM dcb wrote:

> I believe somewhere in the constitution we were given the right to
> bare arms. I believe the founding fathers had something like this
> current episode in mind when they decided the populace should always
> have the means to rebel against and unjust and corrupt government.
> This is tyranny and taxation without representation.

Outing AIG's Bonus Babies: What's the Point?

Here's a better idea.

Let's publish the salary and bonus structure for every employee earning more than $250K per year in every company that has received TARP or TALF funds.

While everyone is getting exorcised over the AIG bonuses, these payments pale in comparison to the money AIG has paid Goldman, Merrell, and a host of other firms holding their toxic paper. Merrell and B of A should be investigated and prosecuted for their backroom takeover deal and billions in bonuses.

What would publishing such results prove? It would expose the exhorbitant, ridiculous sums of money that these financial "wizards" are paid for moving money around. Finally, the average Joe that struggles from paycheck to paycheck could see the obscene pay disparity between people who actually work for a living and those who are now living off our money.

Personally, I'd like to see the IRS take a run at the entire bonus issue. While small businesses and individuals take it in the shorts and pay the full tax witholding, FICA, SUI, etc tab, why is it legal for large corporations to escape their share of these costs by skirting the law and providing a bonus for what should be a salary? These Captains of America don't pay a dime of Social Security taxes after they pass the $106K threshold. Can someone please tell me why?

For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

AIG Bonus Outrage Only Grows Worse

Let's continue down this track. For anyone willing to take off their "free market" blinders for a day, I would recommend reading two books:

John Perkins in "Confessions of an Economic Hitman" leaves his former life as a highly respected member of the international banking community to expose the real reasons that America's chickens are now coming home to roost. As a man on the inside of the capitalist, expansionist game, he takes the reader through his own experience of plying Milton Friedman's brand of Shock Economics thorughout the world stage.

Naomi Klein ("The Shock Doctrine") hones in on how this game was played on all of us at home.

The introduction, ascendency and idolatry of Milton Friedman's brand of shock economics has done more to destroy the world's economy than any economic hypothesis in our lifetime. This is not just Reaganomics /Bushanomics, but the pitting of haves/have nots in a global play orchestrated through Milton's disciples within the IMF, World Bank, and governing neo-conservative world view since at least 1975.

Cutting taxes on the wealthy and re-distributing middle class income up to those captains of industry combined with wholesale deregulation and record deficits under Reagan, Bush I and Bush II, and conveniently leaving the $1 Trillion dollars of Iraq war spending off the books while the national debt ballooned from around $5 Trillion to $10.6 Trillion at last peek is an ingenious spin on what constitutes supply side stimulus, if not outright delusion.

Count the change left in your pockets, unless of course you are one of the few who benefitted from this latest episode of Shock Economics so popular with necons. I'll just ask you the same question Reagan used to ask: "Are you better off now than you were four years ago?"

If you're in the same boat as the rest of us, our "staying the course" has undeniably run the lot of us aground. If you have benefitted, then you're one of the lucky 2% that control 80% of America's wealth, completely comfortable that you'll ride out the storm until the next lunatic can covince most of the people all of the time into something completely counter to their own self interest.


On Mar 19 11:04 AM monday1929 wrote:

> It was called "Corporatism" by Mussolini. Fascism is a good word
> for it too.

Getting a Tax Clawback Right

This back and forth about whether clawback carries unintended consequences misses the main point. The situation that exists in our tax code today is the 500 pound gorilla that this clawback is obfuscating.

An article posted by Investment U exposes part of this tax avoidance scheme practiced EVERY YEAR by the Plutocrats. The salient part of that article:

"For many in the financial establishment, bonuses are simply part of their compensation packages. They have no tie to performance at all. Much of the rank and file receives bonuses as a normal part of their “salary.”

It’s because companies use bonuses as a way to minimize expensive payroll obligations.

Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 40k and I am only required to deal with the payroll effects of 60k."


So what the light of day is now shining on this tax avoidance scheme is a pay structure that should be patently illegal. How can they avoid paying the payroll taxes (etc.) that they, as Employers, owe the Government? If this is legal, why not simply pay thier entire salary as a "bonus"?

Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top?

Add to this simple, common tax avoidance scheme at least four more:

1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck.

3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?

While we are all arguing about the validity of the clawback option, we are missing the larger point of just how egregiously the average Joe has been pummeled by a tax system that redistributes wealth from the working middle class up to the 2% Captains of America that continue to rape this country and its resources.

Look where that system of rewards has landed us.