› 2006 Elections Buy a 50% Bonus Tax
By Dave Funk
2006 was the year of Democrats. No doubt about it. One of the races Democrats won, by 8 points, was that of Rep. Peter Welch from Vermont. Today, America is again, seeing what kind of return they are getting on that risky investment.
Rep. Welch announced that he will propose the Wall Street Bonus Tax Act. That is, a 50% tax on bonuses, while the Whitehouse has already been planning on implementing a “bank tax” on bonuses paid by TARP banks that have already fulfilled their obligations having paid them back with interest.
Welch said, “As most Americans struggle to endure a long and wrenching recession, the same Wall Street bankers who came to the American taxpayer with hat in hand are now preparing to pocket record- breaking bonuses. Financial firms that received taxpayer assistance must remember that they owe their return to profitability to hardworking Americans.”
This is the Obama Administration and Democratic Leadership’s game. They give you something under the guise of being “Good Samaritans” and then they stick a knife in your back and leave you to die. There are two huge issues at play here for me:
Many of these TARP banks that would be taxed have fulfilled all obligations to the TARP program. They have paid back the money with interest. Rep. Welch says that these banks owe the American people because of the bailouts and that the taxes will be used for business lending. When Congress says that tax money will go somewhere, it seldom gets there with so many Congressional hands picking pockets along the way.
Furthermore, this tax isn’t on executive pay. It’s on employee bonuses. It’s a 50% tax on income of people like you and me. So to pin the big fish to the wall Rep. Welch is more than willing to eat you in the process. To make matters worse, what is going to constitute a bonus? Is it an end of year bonus? Is it an end of year commission check that many Americans tirelessly worked hard for all year long?
These are not solutions. These are the problems. A 50% tax is not acceptable and quite frankly Rep. Welch should be voted out of Congress for even thinking this is a good idea for America.
Dave, it's obvious to me that Wall Street has not learned its lesson from 2008, when it heavily contributed to a disastrous economic meltdown.
Capitalism only works when the players are not blinded by their own greed. Sadly, they are. So government must act to protect the people. Wall Street will have to break this bad habit one way or another.
Claire, what you call greed I call human nature. During the recent financial crisis many fingers have been pointed with the accusation of "greed". If it is greed to want as much business as possible? If it is greed to enter into contracts with both parties aware of the terms? If it is greed to want a better life for your family? If it is greed to offer your physical and intellectual labor in exchange for compensation? If it is greed to expect that your income be taxed fairly and not singled out by congress in such a fashion as to make you a second class citizen in a land that was founded upon equality? If these things be greed, may I die a greedy miser. Wall street made its profits by selling its wares to main street. Now that main street can't live on credit beyond its means it wants to persecute its lenders. Responsibility, is not something that should only be expected in other people.
Be that as it may, regular employees should not suffer. Here in DSM you have Wells Fargo Financial, a TARP bank. They have a lot of employees making bonuses based on productivity. These jobs will range anywhere from a phone sales rep/customer service rep or collector to middle management and up. Welch is talking about taxing bonuses without mention of income limitations, so those on the lower end of that spectrum only making $30,000 a year or even those only making $60,000 a year will have their much needed bonus checks taxed at 50%.
Yes there are those that will make a killing off their bonuses but this tax will hurt middle class families in our district.
No, that is not true. This tax would only apply to windfall bonuses (several times more than employee salaries). And it should. Those people have made their money on the backs of the taxpayer. Until the investors who are getting fleeced have the sense to revolt and rise up against the stupid greed, they will continue to help themselves to the trough. BECAUSE I CAN is not a good enough answer. Not in these times.
I love the argument that these people need to feed their families. Of course they do. But do they need a half a million dollars every year? Give the dividends back to the investors, who have gotten fleeced for an entire decade.
Wall Street has been essentially "self policed" for more than 20 years. Time to reign it in.
SPC: You must not be reading the same thing I am. http://www.housingwire.com/2010/01/14/congressman... It says that the tax would only apply to bonuses that are 50k and above and only in TARP-banks.
We were reading different things. 50k is still too low a number to be taxing at a 50% tax rate. I can't fathom any legitimate reason for the Government to intrude in the private sector and pick on banks that are doing it right. Why aren't they taxing AIG? Why aren't they taxing Fannie/Freddie Mac? Instead they pick on the institutions that have fulfilled their TARP obligations and are now profitable.
Further, I don't trust the Government with the money. At least with the employees the money would be redirected into the economy on whatever toys they planned on purchasing. The Government will lose it to the bureaucracy.
That said Clair, Thanks for reading Dave's blog and commenting. It's good to know some people are paying attention and staying informed.
They aren't taxing Freddie and Fannie because they've been taken over by government regulators, who have the good sense not to pay huge bounuses to people for showing up for work!
You know, thinking about that, I am the most reliable employee you'd ever want to meet. I'd like a $100 k bonus for that!
AIG is not even close to paying their TARP money back.
There are the answers to all of your questions. No one on this post or its comments can explain away the fact that Wall Street greed is a huge problem in this country and it causes a major ripple effect in our economy.
So until the FatCats on Wall Street can get some common sense and start policing themselves, we're going to have to perhaps over-regulate them for a few years so they can have a chance to pull their heads out.
AIG hasn't paid it back and there are other banks that will be taxed as well that haven't paid back their TARP funds. Regarding Freddie and Fannie, you're putting too much faith in our Government. See here: http://www.cnsnews.com/news/article/59848. They don't have the good sense not to pay huge bonuses for people showing up for work.
No one can deny that Wells Fargo is a huge employer in District 3. I don't know how many employees are receiving bonuses that will be taxed at 50% but I DO know I'd rather have that money here in District 3. Not in the hands of our Government so they can pay $900,000 salaries up front and another 3.1 million deferred.
Wall Street invested in a mortgage derivative market with loans made by Freddie and Fannie and others. These assets soon became toxic and we have a melt down. Clinton facilitated this derivative market and Bush neglected to do anything about it. Now we have a $6 million compensation package for Freddie/Fannie that even Barney Frank says is too high but said there's nothing we can do about that now. Why not tax them 50% on their obscene payouts?
So who's going to regulate the Government when they've lost their common sense and don't have the ability to police themselves? That's why we need guys like Dave in Congress who are fiscally responsible and don't take out retribution on Wall Street who was encouraged, backed and supported by the Government to invest in toxic assets over and over and over again.
This isn't so much about Wall Street regulation as it is about the Government's explicit and direct intrusion on now profitable companies that are creating jobs and rebuilding the economy. A 50% tax is not regulation, it's intrusion. Dave will protect the interest of District 3.