Close Close

Financial Planning > Tax Planning

Bonus Backlash Spawns Back-Backlash

Your article was successfully shared with the contacts you provided.

Television talk show hosts, public officials and interest groups are starting to express concerns about the American International Group Inc. bonus controversy.

Jay Leno, host of NBC’s “Tonight Show,” said Thursday during an interview with President Obama that he feels uncomfortable about the idea of Congress retroactively punishing people it does not like by increasing taxes on their income.

On Comedy Central, “The Daily Show” mocked the bonuses, but then mocked the more emotional critics of the bonuses by showing a miniature lynch mob rampaging back and forth across the bottom of the screen.

Jon Stewart, the host of the show, then suggested that the fury was going too far by showing Edward Liddy, chairman of AIG, New York, testifying before Congress that someone had written to tell AIG that all AIG executives should be strangled to death with piano wire.

The International Herald Tribune today is running an article about an executive at the AIG Financial Products Corp. unit who was set to receive one of the retention bonuses that led to the firestorm of public and congressional fury:

“You have to understand,” the executive says, ”there are kids involved. There have been death threats. …” His voice trailed off. It looked as if he were fighting back tears.

New York Attorney General Andrew Cuomo is taking a new, softer tone in a statement about AIG’s concerns that publishing the names of AIG Financial Products bonus recipients could endanger the recipients’ lives.

“Mr. Liddy testified in Congress yesterday that he intended to comply with our subpoena and expressed concern for employee safety,” Cuomo says in the statement. “Mr. Liddy has in fact now complied with the subpoena. We are aware of the security concerns of AIG employees, and we will be sensitive to those issues by doing a risk assessment before releasing any individual’s name. The Attorney General’s Office is a law enforcement agency and is experienced in making these assessments…. At this moment, with emotions running high, it is important that we proceed diligently, with care, reflection, and sober judgment.”

The Competitive Enterprise Institute, Washington, and the Council for Citizens Against Government Waste, Washington, have put out statements condemning H.R. 1586, a bill introduced by House Ways and Means Chairman Charles Rangel, D-N.Y., that would tax 90% of income over $250,000 of individuals who receive bonuses from companies that receive large amounts of federal bailout money.

The bill, which appears to contain typographical errors, passed 328-93.

The bill “is a Trojan horse that uses the legitimate outrage over the American International Group bonuses to hit a wide variety of employees, and would be a serious blow to the economic growth we are trying to revive,” John Berlau, a CEI staffer, says in the CEI’s statement.

Many companies were “practically forced” to take bailout money to keep seriously troubled banks from facing a stigma, and the 90% tax would apply to employees regardless of the employees’ role in their companies, Berlau says.

“CEI opposed the creation and further extensions of the [bailout program] … but using the tax code to punish these firms’ employees is seriously wrongheaded,” Berlau says.

“Sports teams frequently receive subsidies for new stadiums, but we don’t tax athletes at 90%,” Berlau says.

CCAGW President Tom Schatz says the Bush administration, the Obama administration and Congress are responsible for the problems with the bailout program and the law provisions that permitted AIG to continue the retention bonus program.

“Now the politicians are feeling the heat over their irresponsible behavior and are trying to deflect it by demonizing and punishing AIG,” Schatz says. “They should not be allowed to get away with it.”


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.