Lunchtime Links: Ominous moves to clawback bonuses through higher taxes

18 March 2009

2 minute read

Lunchtime Links: Ominous moves to clawback bonuses through higher taxes

It's not a certainty, but the fact that it's being discussed at all suggests a new approach to retrieving bonuses that are deemed unfair. The top Democrat and Republican on the US Senate Finance Committee are both calling for higher taxes on bonuses at institutions receiving government money. Specifically, they want a 35% tax on individuals receiving performance related bonuses above $50k, and a 35% tax on organizations paying such bonuses. Merrill Lynch bankers in the US may have reason to be scared, although current proposals only relate to bonuses earned or paid after January 1, 2009.

The good news in the UK is that Lord Turner's tome contains no new developments on remuneration, but reiterates what went before and adds that proposed new capital requirements will probably have a more stabilizing impact than reform of the compensation system.

Pesto's digested version of Turner's main points. (BBC)

Spitzer: bonuses aren't the real scandal at AIG. (Slate)

Eleven of the individuals who received "retention" bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million. (Infectious Greed)

House panel wants Merrill bonus records. (Wall Street Journal)

Who's doing what at Merrill BofA. (Reuters)

Unemployment is not rising fastest in the City; it is rising fastest in Wales. (Financial Times)

Corporate banking buoys RBS. (Financial Times)

Everyone wants to work for a hedge fund or a boutique. (Reuters)

New debt advisory house, Versatus, is born. (Financial News)

Meredith Whitney says it will get WORSE. (CNBC)

Layoff, the game. (Tiltfactor)

AUTHOReFinancialCareers UK

Insider Comment

al
alan
19 March 2009
The US arrogantly believes its tax laws can be applied to foreign jurisdictions and to foreigners who played no part in the credit crisis, their only crime having been to work for a US bank. I am not an American and I don't live in America and am taxed at local rates according to local law, not US law.
Many foreign employees have worked hard and responsibly made money for their employers and thus have benefited the US. Their compensation has already been cut back savagely.
I hope not a single foreign employee agrees to pay a single cent of this baseless, stupid and illegal retrospective "excise tax". American law applies to America and nowhere else. If these short sighted and mindless congressmen wanted to ban any bonuses at all and all performance related pay they should have made it a precondition of receiving a government stake and they should stop making the rules up as they go along.
I am really beginning to understand now why so many people in the world hate America. It is because they behave in an arrogant, hypocritical and disrespectful manner towards the whole world, riding roughshod over the rights of others.
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