Comments on: Punitive Tax Rates of 90% Could Cause More Problems Than They Cure

By: Punitive Tax Rates of 90% Could Cause More Problems Than They Cure

Punitive Tax Rates of 90% Could Cause More Problems Than They Cure — Thu, 16 Apr 2009 15:31:02 +0000

[...] By Martin Hutchinson Editor, Permanent Wealth Investor Money Morning, Investment News [...]

By: m gross

m gross — Thu, 02 Apr 2009 16:42:13 +0000

Anyone who made successful deals for a solvent company will remain unaffected by this 90% provision, no matter how large their bonuses.
The ones affected are persons who received outrageous bonuses from companies who were forced by their insolvent circumstances to beg and receive aid from the taxpayer.
You do not need a degree in economics to tell the difference between the two, altho having one may make it more difficult. Once taxpayer aid has been received, there is a reasonable legal argument that contractual bonuses need not be adhered to due to force majeure. Any attempt to suggest otherwise represents spin or insensitivity. The latter appears to be de rigeur on Wall Street.

By: Searcher

Searcher — Sun, 29 Mar 2009 14:55:35 +0000

Please explain "retention bonus." Is it a reward for past performance? Is it an inducement to retain the beneficiary based on past performance? If the bonus is paid and the beneficiary leaves employment, is the bonus to be returned pro-rata, or otherwise? Is the bonus and terms of award a point of an employment contract for a specific person, or merely a compensation 'policy' applied to a defined group?

By: Kevin Beck

Kevin Beck — Sun, 29 Mar 2009 14:54:43 +0000

I think it is unfortunate that we get the government that we pay for. The world would be better off if Washington, DC actually believed in something worthwhile, like capitalism. What we have had for the last 75 years is hardly capitalism, so we cannot blame it for our current problems as one reader suggests. I agree that if banks cannot make a profit doing what they are supposed to do (finance productive business and consumers), then they shoudn't be in business. And I also agree that excess taxation would result in an excess of productivity not occurring. However, in the case of our good old Federal government, this might be the best of all worlds. But for those who are actually productive, this would be a disaster.

By: OilFieldTrash

OilFieldTrash — Wed, 25 Mar 2009 10:44:55 +0000

You know, the more I read what you have said, the more I agree with you about the days gone by. The era that you are talking about was a productive era. The greed was not so great a mind-set by the up and coming financial management group because it did no good to get into that top tier. Your money was actually going to go back into the system, not on to your yacht, or your summer house, or to your yearly at the Met, or all of those other little things that separate the ultra rich from the middle class and poor. As you put it, there was no reason to do the 30 minute power lunch, so why not take a customer to a well deserved long lunch at the shop, talk a little business and enjoy life, rather than plot that next big M&A that is going to allow you to screw the other guy out of his market money. Today corporate America skims 10% of the profits of the companies off of the top. One of the most important votes that I will make going forward is to limit perks and compensation bonus to company officers. Not take them away, rather make them reasonable. I believe that every stock holder should do the same. Reduce this greed! This is one of the reasons that we are loosing market share abroad and at home (read GM, Merrill Lynch, AIG, GE), this is one of the reasons why we can not compete across several markets today. Sure, the Google-heads can produce (but can you say BIDU) however many industries just do not have the completive advantage that we use to hold, so we throw manufacturing out the door and go to services (fast becoming an India market BTW).
Why not go back to that era. Rather than just taxing the bonus boys that are living off of our Grandchildren’s money via Tax supported bonuses, let’s just tax every body’s money above $250,000 at a 90% rate. I truly believe that the bygone days that you talk of produced more solid solutions than the days that we are seeing today.
But seriously though, maybe for just one or two years, while we try to struggle out of the soon to be 10% unemployment, watch the TV as people are evicted from their houses, see the street population grow in our papers these folks can suck their voracious appetite for their next big killer bonus back and look around at the environment that they also have a responsibility to fix. I would not mind it if the Congress folks (especially the one that have more money than sense) would forgo their salary for a while. They might truly develop real empathy for their real constituency.

By: valter

valter — Wed, 25 Mar 2009 09:26:59 +0000

Can I ask when people responsible of the financial and economic crisis will be called to pay the bill of theirs 'mistakes'(euphemism) instead of receiving premial bonuses?
And to have bonuses deriving from the 'brilliants results' of their jobs…? and not from bailout's money deriving from jobless tax-payers???!!
Thank you

By: Investor

Investor — Wed, 25 Mar 2009 02:36:43 +0000

Thoroughly useless drivel.

By: VentureShadow

VentureShadow — Wed, 25 Mar 2009 00:16:04 +0000

Hutchinson missed the forest for the trees. The 90% tax is not on employees of all firms, or even all bankers. It is only on the failures. It is not just a tax–it is a punishment, and punishment is well deserved. As with all punishments it has real shortcomings and it can backfire. Does AIG deserve punishment? They sure do, and lots of it!

By: howard hillman

howard hillman — Tue, 24 Mar 2009 22:30:23 +0000

This is really meant for Martin:

Excellent article! I "entered" Wall Street with the Chemical Bank (1960) and had the pleasure of dining as described and had many friends from the UK who kept trying to tell me that the US was crazy to work as hard as we did ….and it also didn't make sense in the UK to have high salaries but glorious perks due to taxes.

Great, FABULOUS idea to tax post US office speaking fees!

By: John

John — Tue, 24 Mar 2009 20:40:58 +0000

First of all the Banks are a catalyst to move money in the economy they do not create anything. They should be treated like all other services if they can't make a profit "get out of the business", instead of taking bailouts from the tax payers.
One thought is to lower interest rates on credit cards.