BF2S Forums Dem Congressman introduces 50% tax on bonuses

Agent_Dung_Bomb wrote:

JohnG@lt wrote:

Agent_Dung_Bomb wrote:

These banks played a large role in the situation that we are still in at this moment in time.  They come with their hands out to keep from going bankrupt, and yes they paid it back, but now they think it's time to go back to business as usual while the situation they helped create is very much at hand.  Even if it is only for a limited period of time, I say they should tax these higher-up execs at 50% of their bonuses.

Maybe this will be an incentive not to do what they were doing before, and with people like this, hitting them in the pocket book is how you make a point.

Take the emotion out of it and think about what you're saying for a few minutes. Think about the consequences.

That's just it, I am thinking about the consequences.  The consequences of not hitting these guys where it hurts to help them understand that they can't keep doing this crap.  It doesn't have to be permanent, but to give these guys billions of dollars to keep them from going bankrupt (basically for free) and then just letting them go back to business as usual while the economy is still in bad shape, and millions of Americans are watching as their investment accounts have tanked, and seeing just how many years it will take for their accounts to recovery from this fiasco.

I'm not saying every executive, just executives of institutions that took TARP funds, and it shouldn't be permanent, but should be long enough to get the point across.  These guys get yearly bonuses that are more than most Americans will make over their entire working lives.  As of 2008 the US median income was $61,500.  Even at that wage for 40 years one would earn a grand total of $2.46 million dollars.  And just how much do these guys get in bonuses every year, let alone their wages?

Except the banks don't bear all the responsibility. Most of the damage was caused by the Federal government meddling with who could receive mortgages. Certain members of congress pushed for the sub-prime loans because they wanted more people to be homeowners, even those who don't deserve it.

As far as their wages are concerned, you're obviously not just a little jealous. Can you do the work they do? If you could you'd be working with them making money. Don't act like a little bitch because someone makes more money than you, or more money than average. Idiot statements like the one you made are why stupid shit like communism was thought up. "Everyone should be equal waaaaah".

Phrozenbot wrote:

JohnG@lt wrote:

Phrozenbot wrote:

And if that revenue is because of 1/30-60 leverage, you can easily make a lot of money just with a minor swing in your favor. It can also break you if things turn a bit sour, hence why I feel they are fundamentally weak. Bear Stearns handed out the biggest bonuses and were the first to fail.

Well, they're brittle, not weak. It's mostly to do with the fact that they live and die by their quarterly reports. Customers are fickle and will jump ship to another firm if that other firm produces higher profits. So, instead of managing a long term portfolio they're forced to essentially gamble on the stock market, betting this stock will rise and this one will fall in the short term. The risk of catastrophic losses is remote when you're playing in such short windows of time with so many different stocks but this is also the reason they tend to under-perform the market indexes over a long period of time.

You're right, it's not like they are expecting to fail but I do think those ratios are very careless to say the least. Short-term or not, they've got nothing to fall back on.

Being long is always more sensible anyways.

Ratios are careless? Hardly. They dole out 44% or so of their revenue in payroll + bonuses. The average company has overhead costs and capital goods costs that eat up 70% of their revenue. Payroll is a pittance compared to overhead at these companies which is why the wages are so low. Instead of bashing them for their model, companies should be looking to emulate it instead. It would drive up wages across the country.

DrunkFace wrote:

Cybargs wrote:

I think its just an incentive to let bonus' be in the form of stocks no?

Errr wouldn't that be taxed too?

Yes, and at a lower rate. Capital gains tax is at 20%, income tax for their bracket is about 35%. If the companies gave out their bonuses completely in stock the government would lose billions in revenue

JohnG@lt wrote:

Agent_Dung_Bomb wrote:

JohnG@lt wrote:

Take the emotion out of it and think about what you're saying for a few minutes. Think about the consequences.

That's just it, I am thinking about the consequences.  The consequences of not hitting these guys where it hurts to help them understand that they can't keep doing this crap.  It doesn't have to be permanent, but to give these guys billions of dollars to keep them from going bankrupt (basically for free) and then just letting them go back to business as usual while the economy is still in bad shape, and millions of Americans are watching as their investment accounts have tanked, and seeing just how many years it will take for their accounts to recovery from this fiasco.

I'm not saying every executive, just executives of institutions that took TARP funds, and it shouldn't be permanent, but should be long enough to get the point across.  These guys get yearly bonuses that are more than most Americans will make over their entire working lives.  As of 2008 the US median income was $61,500.  Even at that wage for 40 years one would earn a grand total of $2.46 million dollars.  And just how much do these guys get in bonuses every year, let alone their wages?

Except the banks don't bear all the responsibility. Most of the damage was caused by the Federal government meddling with who could receive mortgages. Certain members of congress pushed for the sub-prime loans because they wanted more people to be homeowners, even those who don't deserve it.

As far as their wages are concerned, you're obviously not just a little jealous. Can you do the work they do? If you could you'd be working with them making money. Don't act like a little bitch because someone makes more money than you, or more money than average. Idiot statements like the one you made are why stupid shit like communism was thought up. "Everyone should be equal waaaaah".

Oh puuuulease!  Are you still on that crap about banks being forced to make mortgages?  Yes, there was to a degree but do you realize just how many banks that weren't required to do this, did in fact start doing it?  They saw the potential to make money and dived headlong into it without really giving a shit about the outcome.  Numbers were being manipulated, flat out lies were being told, and people that did in fact qualify for traditional loans were being put into sub-prime mortgages because the fees were higher.  And when they were done they turned around and sold these mortgage backed securities as AAA rated.  Once sold, they started it all over again.

And I never said anything about being equal, so don't even start that bull shit.  I said the average working American won't even earn in their entire life what these guys will get in a SINGLE YEAR for their bonuses.  These guys were playing fast and lose.  The working American struggling to make ends meat, keep their homes, and their jobs, and they propped these guys back up, and they want to go right back to doing what they were doing before. 

Sooooo, where exactly is the disincentive not to do this again?

JohnG@lt wrote:

DrunkFace wrote:

Cybargs wrote:

I think its just an incentive to let bonus' be in the form of stocks no?

Errr wouldn't that be taxed too?

Yes, and at a lower rate. Capital gains tax is at 20%, income tax for their bracket is about 35%. If the companies gave out their bonuses completely in stock the government would lose billions in revenue

Errr. Doesn't the value of the shares get counted as 'income' and subject to the same taxes as any cash payout?

JohnG@lt wrote:

Phrozenbot wrote:

JohnG@lt wrote:

Well, they're brittle, not weak. It's mostly to do with the fact that they live and die by their quarterly reports. Customers are fickle and will jump ship to another firm if that other firm produces higher profits. So, instead of managing a long term portfolio they're forced to essentially gamble on the stock market, betting this stock will rise and this one will fall in the short term. The risk of catastrophic losses is remote when you're playing in such short windows of time with so many different stocks but this is also the reason they tend to under-perform the market indexes over a long period of time.

You're right, it's not like they are expecting to fail but I do think those ratios are very careless to say the least. Short-term or not, they've got nothing to fall back on.

Being long is always more sensible anyways.

Ratios are careless? Hardly. They dole out 44% or so of their revenue in payroll + bonuses. The average company has overhead costs and capital goods costs that eat up 70% of their revenue. Payroll is a pittance compared to overhead at these companies which is why the wages are so low. Instead of bashing them for their model, companies should be looking to emulate it instead. It would drive up wages across the country.

All I'm saying is their impressive earnings don't surprise me, neither the fact they go bankrupt. If they can play their cards right and avoid huge losses, respect then. That takes a lot of skill in a sometimes very uncertain market. This recession was a complete black swan to essentially everyone. I think 2010 will be the same thing.

Remember we still agree this legislation doesn't make sense