"US House passes 90 pct tax on bailout bonuses
Swept up by a wave of populist economic anger, the US House of Representatives overwhelmingly voted Thursday to slap a 90 percent tax on bonuses for top executives at bailed-out firms like AIG."
http://news.yahoo.com/s/afp/20090319/ts_alt_afp/uspoliticsinsurancepublicaidaigcongress_20090319214248
Consider the consequences and implications of this move by the US government.
Barry
ReplyDeleteI think what the US government did was right. Using bailout funds to give bonuses destroys the purpose of the bailout funds altogether. As the name states, a bonus is a bonus, a gift when the company is doing good, not a privilege. As such, during bad times, bonuses should be completely forgone.
I believe that this move would most likely be kind of like collecting back the bailout that the government gave to AIG in the form of taxes from top executives.Thus this would also probably be a message to other companies,which are helped out by the government,that the government is not helping them out for no reason,thus attempting to encourage them to draw up new policies to perform better. -Ong Wei Hong,0924
ReplyDeleteGreat, my first two responses! Barry and Wei Hong, keep it up! You may want to go to the link below to read the response of the AIG's bosses to the proposal of the tax.
ReplyDeletehttp://news.bbc.co.uk/2/hi/business/7960459.stm
What do the rest of you think? What would be the consequences and implications of such a move by the AIG's bosses?
Brendon
ReplyDeletewell...i agree with Barry that this is a really good move by the American government. This will deter companies from taking advantage of the bailout, especially in the light of the retention bonuses that AIG allegedly gave out to the leaders of the company. It will also appease the public who probably feel that they have been cheated by these incidents.
P.S. Forgot to put my name in the previous comment...
In my opinion, I think that the AIG should be blamed for this as they should not use the government rescue money as bonuses to top executives. The US government should look into this matter and prevent such incident from happening again.
ReplyDelete(Wang Xueyi )
The fact that the US House imposes a 90 percent tax on bonuses for top executives at bailed-out firms like AIG will help to assuage and justify taxpayers’ anger about the lavish bonuses that AIG provided its employees at the expense of taxpayers. With such strict, harsh and fearful measure, it will help to reinforce the regulations and maintain discipline in workers’ professional conduct.
ReplyDeleteHowever, the new tax legislation will also pose some negative consequences. Firstly, it will affect US government’s reputation as it will be seen as an abuse of authority by implementing such a ‘punitive’ tax. Secondly, the government will lose support from the financial sector as its employers and employees may not be willing to accept such unfavourable policy and drop out of the government’s rescue programme. This will likely cause a freeze of the nation’s credit market and instability in the banking system, thus undermining the economic recovery efforts and worsening the financial crisis.
Overall, I think that there is a need for more reasonable and mature approaches by the government in dealing with the misuse of bailed-out fund. Coercive rules and regulations to control behaviours do not really solve the problem but just aggravate it. More importantly, there is a need for government to possess inspirational leadership to guide people to do right things based on moral values and principles despite this hard time. To quote the saying of Mr. Dor Seidman, the CEO of LRN which helps companies build ethical cultures, he said, “Laws tell you what you can do. Values inspire in you what you should do. It’s a leader’s job to inspire in us those values.” --- Elton Foo (0924)
I support the American government in doing this. The reason why AIG still exists is because the government has been pumping in a lot of money. How can they spend the money on bonuses instead of saving AIG? It will be wasting the government's money and effort. To put it in a crude way, the top executives of AIG is actually pocketing the money pumped into AIG to save AIG. On top of that, in this difficult time of economic crisis, how can AIG spent so much money on bounses? There are both positive and negative consequnces to this matter. The American government's action resulted in more funds avaliable in AIG to be spent on saving AIG instead of bounses. On the other hand, the AIG's top executives may be angered by the incident and refuse to work hard in saving AIG, worsening AIG's economic situation. -- Chng Hui Ming 0919
ReplyDeleteI feel that this debacle has made both US and AIG laughing stocks in the whole world.
ReplyDeleteA troubled firm which struggled to survive till this date(solely due to the bailout plan) could still give away bonuses to its staff? I have to admit, it was just ridiculous. On the contrary, they should ask the top brass of AIG to contribute money instead of pocketing them.
USA, regarded by most as the modern economic powerhouse. However, in recent times, they have not acted like one. For example, the origin of the current economic crisis is none other than USA.
The US government however was partly to blame in my opinion, as it did not have any clear system as to how the money from the bailout plan was going to be utilised by AIG before granting the funds. The money used in the plan is the taxpayers' blood, sweat and tears... ...
This move by the US government to slap a 90% tax on bailout bonuses to top executives is primarily a good move, as it would deter companies in trouble from misusing funds meant to save the companies, especially in these difficult times.
However, I feel that it will just be a band-aid to a gunshot wound as it was a little too late. The deed has been done, the money could not be fully recovered. It should have been implemented in conjunction with the bailout plan.
Many taxpayers were outraged by the misuse of their hard earned money. This move by the US government would be an attempt to appease these taxpayers. Some taxpayers would feel more secure as they now know that their money would not be misused while others will remain adamant about the effectiveness of the law.
This move has highlighted the flaws and potential flaws of the bailout plan. It has forced the authorities to review the regulations and stamp out any loopholes in the bailout plan. This will affect any new bill that may come in future.
I hope that this move by the US government would serve as a warning sign for troubled companies trying to 'emulate' AIG.-Hioe William 0919
Jasmine Hui (0919)
ReplyDeleteI personally feel that AIG is truly irresponsibly in managing the bailout funds so carelessly. Not only did they undermine the Taxpayer's confidence in the government's reformative plans to revive the economy, this incident gave companies an impression that they can get off Scott free despite abusing funds, and only get a rebuke instead.
This is contributed due to the lack in action taken by the US government to prevent such a shameful incident from happening, and instead of inducing measures to make an example of AIG, preventing such an episode from repeating itself. Instead, the government pumped more money into AIG again.
Hence, taxpayers would not have much confidence in the proficiency of the government, to manage the funds and to guide them out of this crisis. This would have a disastrous effect, as the people may stop supporting the schemes put out by the government in the future, thus, rendering the schemes redundant.
Furthermore, many are beginning to loose hope in the bailout schemes, which is starting to look like the throwing of money into a bottomless well.
In addition, would the pumping of so much money be able to alleviate the current economic situation? The US government just seems to be pumping more and more cash into this endless pit. It just seems to be a means to keep AIG afloat, staving off the worsening in the current situation. Such a measure would not be practical in the long run, as it will soon become too costly to maintain and the root of the problem would still remain unsolved.
Lastly, such extensive use of the country's resources, on just a single company would no doubt infringe the development of other areas in the country.
I'm really pleased with the comments that you all have made here. Really Insightful comments! Great Job!
ReplyDeleteI agree with what the government is doing. In this way, it ensures that AIG does not continue to commit those dishonest acts. Furthermore, this action of the government is able to appease the people in the US, thereby easing the unhappiness that they have towards the government and the AIG.yingying 0919
ReplyDeleteI couldn't agree more with jasmine. The misuse of bailout funds by the AIG has shown the irresponsible side of the company as well as the government. While AIG is giving out unnecessary bonuses using the taxpayers' hard-earned money in these difficult times, the blame does not solely lies on AIG, but also on the government. Instead of keeping a closer eye on how the money they given are spent, the government continues to throw in billions into the "black hole", probably even without realizing the lost of the country's funds in the first place. The measures taken now only came after billions are wasted. Is it possible that the government still has the notion of having wealthy funds, and that giving funds to the people is the best that they can do? -miao xian (0919)
ReplyDeleteI agree with this move of the government too. The government gave out the bailout funds to companies like the AIG to help them ride through the current economic crisis. They believed that if a large company were to fall like the Lehman Brothers, the economic crisis would be further worsened. Giving out such enormously high bonuses is very unfair to the American taxpayers who came up with the funds for the bailout. Their money is now used to support the high executives of AIG so that they can continue living in luxury while the average Americans are now suffering from the crisis. It is because of the executives’ irresponsibility and greed that AIG is currently in a mess and surviving on the bailout funds. I strongly believe that the executives do not deserve a single cent of bonus.
ReplyDeleteHowever, some argue that such high bonuses are necessary to keep the executives in the company so that the company can continue running its daily functions. I disagree with this point of view because statistics have shown that AIG’s business have not improved since that first bailout. Even though some of them have returned their bonuses, having accepted them in the first place already shows their greed. Furthermore, I find it redundant to keep the reckless executives in the company for they are not really committed to pull AIG out of the crisis. They are the ones who created the mess. It is their responsibility to solve, without any incentives.
If the government does not implement such a move, AIG and other companies are just going to pocket the funds and not help improve their company situation. Americans would soon lose confidence in the governments’ policies and not support them. There may be increase rioting and America would be thrown into greater chaos. Their reserves would also run out one day, and America will no longer have the means to improve their economic situation.
In conclusion, I support the government’s move not only as a method of punishing AIG, but also deterrence to other companies. – Jazlyn Yee, 0919.
I disagree with the decsion to impose taxex on the bonus payouts. The actions of AIG had have indeed outraged many taxpayers, but what difference does the tax on bonus payouts make? Realistic speaking, the taxes will not benefit the US government a lot. Its merely a 100 million we're talking about, nothing as compared to the hundreds of billions that the government had used for bailouts.
ReplyDeleteSince retrieving the money was probably not the reason for imposing the taxes, then why did the government do so? Was is just to condemn the actions of the AIG, to show the displeasure of the public? Maybe, but AIG has already realised their mistake, what for all the fuss?
By doing so, it deafeats the purpose of bailouts to AIG in the first place, which was to prevent AIG from collaspsing. So with the policy, is it right to say that the government is willing to let AIG collaspe now?
Alike Brendon, I agree that this is a good form of so-called punishment for the AIG executives. They were earning more money and receiving larger amount of bonuses whereas the people are losing more money. This punishment carried out by the government would not only just appease the people and yet also, serve as deterrence for other large companies to follow in AIG’s footsteps. Rather than the current policies, I feel that the US government should draw up new plans so as to allow the country to grow more effectively and efficiently, without angering the US residents much and in turn, the residents would create less trouble for the government, making US a more violent-free country.
ReplyDeleteZhi Yun, CT 0924
Imposing taxes on bailouts for executives from firms like AIG is a good punishment as it states the seriousness of their mistake. Using the bailout funds for their own use is seriously punishable because the American taxpayers are affected as they came out with their own fund for the bailouts. This taxes on bailouts will therefore teach a lesson to companies like AIG not to misuse it. Jeya, CT 0927
ReplyDeleteI think with this scandal, the AIG reputation has gone down. They had really went overboard to use the money the U.S government gave to give bonuses to the employees, instead of using it to help improve the company situation. They had misused the trust that the U.S government had in them. It is the taxpayers money that the U.S government had used, so they should actually use the money wisely.
ReplyDeleteDid the AIG really learnt their lesson? No one really know. Acoording to the New York 's attorney general, Nine of the top 10 recipients of bonuses from US insurance giant AIG have agreed to return them. Did they really did it because they feel remorseful taking the taxpayers money as bonus? Or did they did it out of pressure from the U.S public? Only they will know it themselves. The new AIG CEO who took over only after the agreement of the bonus is expected to be able to get all the money for the bonus back. It should be a 10 out of 10 recipients of the bonus returning the bonus back to the company, not 9 out of 10. It is actually not a good time to give out bonus. Many people all over the way are already jobless. The employees in AIG should be thankful enough that they manage to hold on to their jobs because the U.S government had saved them, and not complaining that there is no bonus for them.
The U.S house of representatives had gone a step further to slap a 90 percent tax on bonuses for top executives. Not only did it help in the AIG scandal, it also help to prevent future dishonest acts like that to happen. In the times of a bad economy, everyone would be happy enough to have a job to tide them through the times, even without a bonus.
I would like to know why the imposition of taxes on the bonuses is being considered a 'punishment'. We do not have the information that describes what exactly these bonuses were used for. Were they for the benefit of AIG, the company? If they were, I see little to be angered about, for the article states that "the US government believed [AIG]s intricate web of ties with banks worldwide posed an imminent risk of financial collapse not just for the United States but globally. "
ReplyDeleteHowever, anger is understandable if the bonuses were handed out with good performance in mind, or if the executives had used the bonuses for selfish means. Clearly the AIG executives have done anything but 'good' in their performance, and probably don't deserve the bonuses for themselves.If they weren't believed to be tied with banks worldwide, they would likely be gone by now.
As Zhi Yun stated, the imposed taxes would do well to appease American taxpayer-protestors, but is it the right thing to do? I don't mean to say that the American government should neglect its citizens' approval (this would backfire tremendously), but I think we need to know AIG's reasons for using the bailout money as executive bonuses before we jump and shout. What were AIG's reasons for giving the bonuses?
Looking at this site:
http://www.wisegeek.com/what-is-a-retention-bonus.htm
we see that there are more than one type of bonus. For instance, 'retention bonuses' are given to keep employees in the company. This would appear to be a reasonable as the fallen AIG would need much to retain its executives, let alone its employees, in the firm. We need AIG's replies and reasons before we should jump to conclusions about whether or not the bonuses were a bad thing. Maybe they were. Maybe not.
Alexander, 0927
I believe that bailouts given to these companies like AIG from the government is flawed in its policy. The government simply hands out the money without any restriction on what this money is going to be spent. My stand here is not that the government should have totally banned giving out bonuses for bailouts, but rather, have a speculation about the situations where and when the company or organization saved are abusing the bailout. Since Alex has spoken about the different natures of bonuses. Even though, the US government could have created beforehand a policy which would require the company or organization in question to submit an application for using bailouts as bonuses(in whichever context). The above is simply an example of what the government could have done. I believe with resources and manpower of the United States, much more powerful, stringent and versatile policies could have been made and implemented long before events like this could have chance of striking. However, the reason that this piece of news came as a shock to us is that the mindsets of businessmen and directors have changed. Even in crisis, the company is still so engaged in money and income for themselves instead of trying to save the company, thinking that even if the company crashes, they would still have a large private reserve for themselves. This shows that the selfishness or capitalism in the modern world is increasing and mutating at an extreme pace. Moral values and conscience is dropping amongst the greenery of cheques and notes. I believe the only power to stop the mutated economic monsters now is only political power. Everything else cannot be strong enough to shake these people. Their mindsets have already become to twisted that they are not re-educatable anymore. Therefore, only through the sheer brute strength of the House and the law that they give up. But since things have already progressed to this dire state, what the States have done is most probably the best measure they can. However, the law is designed by humans and are not loophole-free. The only reason for 9 out of 10 top bosses agreeing is because of political power acting upon them. Many riots and uprisings have happened in retort of AIG's despicable actions, but AIG's top men simply ignored the majority. Through this is can be easily inferred that much economic prowess has grown and mutated through these "developing" years. The law has become the last line of defence for us against these money-minded companies. Truthfully, I have no idea how or what can change the situation, but let us hope that through restricting them with the law and the overwhelming economic crisis happening now can sort of "knock some sense into" them.
ReplyDeleteJohn Zhou Kun, 0927
By imposing a 90 percent tax on bonuses, the US government will be able to establish a better image to the taxpayers. The US government overlooked some matters when they came up with the bail-out plan. They did not predict or foresee the implications that will happen if they introduce the plan. And because of this negligence, the taxpayers' money are being misused. This, caused the government negative image in the citizens' minds.
ReplyDeleteIn order to salvage the situation, they imposed the tax on the bonuses. Hence, one of the consequences is that, the US citizens will start regaining confidence in the government.
In addition, taxpayers will view AIG negatively, and their already bad image of AIG will fall even further. They will detest AIG and become prejudiced towards anyone related to AIG.
AIG executives will not be too pleased with the 90% tax and opposite to the taxpayers, will hold a dislike towards the government's actions.
Some implications due to the US government's action may be that the citizens will be so satisfied with their ability to implement a counter measure in such a short time that they continue to vote for them in future elections, enabling them to hold onto power for the next few years.
Economically, the US economy may be able to walk out of the recession faster, as other bail-out firms will not do the same as what AIG did as they fear opposes. With the funds more appropriately used, the economy will recover faster.
By:
Angie 0919
Alexander, now as i have come to think of it, what you have said do make some sense.
ReplyDeleteThe 'bonuses' could be means to keep their employees in the company. This gives them a certain incentive to continue in the company, helpig it out of the rut it is in now.
However, there are reports saying that some top exeutives received more than $3million as bonus! I think the amount might be too extravagant given the current economic situation. These top executives should reject the bonus or at least postpone the acceptance till the day that AIG or the economy is stable again.
One possible situation I foresee if the current economic crisis is not resolved soon is that the US dollar would become so weak that it might be too difficult to recover from it. This will lead to a revolution in the economic world. -Hioe William 0919
i dont think by giving them bonuses will do any good. the employees of the AIG should realized that they are working to resque their own economy. it seems like they are asking for more. they shouldnt have received the bonuses because the money used for the bonuses can be use as rescue fund for smaller company. the AIG should have return the money, just like what the fannie mae and freddie mac did earlier. th governemnt also should realised in the first place that its not the executives who needs the money, but the low income people to start new business so that the economy of US can recover faster.
ReplyDeleteby:
huseyn 0927
I agree with what the US government did on imposing a 90 percent tax on bonuses for top executives at AIG. It is a logical step to do to help recover the amount that were misuse by AIG so as to appease the angry citizens. AIG should not have spend this money that is use to save their company on such unimportant stuff. It is like they have no priorities. They think that they can use the money anyhow once it is in their hands but they are wrong. They got caught and were punish. Their company name will be view in a bad way and few people will be willing to buy insurance which will affect their company's business. This incident will also be a warming to other companies to not misuse the money the US gorvenment give to save their country.
ReplyDeleteHowever, AIG should not be held solely responsible for the situation.The government also has a part to play. There were some miscommunication as according to washington post AIG informed the US Federal Reserve three months ago that it would pay the bonuses on March 15, but the Fed failed to notify Treasury or White House officials for months. Due to miscommunication, it resulted to AIG being view in a negative line but they should not have gone ahead with the bonus paid out without waiting for appraoval. The government should look to improve communication and efficiency within themselves so as to prevent such things from happening.
One of the implication of this situation is that US government should be more cautious when they are implementing a measure or policy so as to prevent such things from happening. And also due to the government fast response,the citizens will regain their confidence in the government and continue to support the existing party in power.
Justina 0919
I agree that what the AIG executives have done is wrong. Giving out bonuses of US$169 million in the worst economic crisis since The Great Depression is totally unethical and immoral even though what they did was in every right legal. This has obviously angered the taxpayers as they are the ones who is indirectly paying for this bonuses that they strongly protest. The taxpayers must be wondering 'Why did i give the people that caused this recession more money?'. They must be furious when they heard about the bonuses given out. But I'm sure all of you reading this comment would probably think or say the same thing. I won't bother writing anything more about how angry everyone feels anymore. Now i will try look at it at a different point of view. Why was the bonuses given out? Maybe it was necessary? If i was one of the employees working for AIG i must feel pretty stressed out to be working for the company that had contributed to this recession. So my first thought would to just quit my job or maybe even kill myself for being in such a financial crisis. Most AIG executives are already pretty well off, so quitting now wouldn't be so bad. What i feel AIG was trying to do is to keep this executives from quitting by giving them incentives which came in form of bonuses.Because in this crisis we can't afford losing the brightest people's in the business, we need them in the office trying to solve this crisis. If I offered the job to anyone that protested for this bonus, most would probably reject the offer. Not many people are capable of handling the jobs these executives face. This is not some office job where you key in numbers into the computer and that's it. The company depends on them to make the right decisions so maybe this bonuses wasn't so bad.
ReplyDeleteI think that the way AIG used the bailout money was very inappropriate. Instead of using it to put the company back on track. They used the tax payers money at their own will. The American taxpayers will be unhappy about the way that AIG has handled this and started to lose trust in the root of the problem. The US government.
ReplyDeleteI think that the companies now should be cleaned out and make way for the new companies and only then the economy can totally be rid of suchs problems in the future.
Yiheen 0927
I agree with the US government in imposing a 90 per cent tax on executives that received bonuses from AIG. I think that this is a good way to appease the angry tax payers and it can recover the tax payers' money at the same time. The US government left a bad impression on the people as they overlooked the possible problems of handling out large amounts of tax payers' money to companies. The US government should be more cautious when handling this kind of issues as it may affect their votes at the next election. However, its was not totally AIG's fault as the bonuses handed out to they staff of AIG will encourage them to work harder to improve the situation of AIG and ultimately improve US economy. The US government was also efficient in handling this incident as they were able to implement measures to solve this problem. I think that companies should be transparent in handling the money give out by the US government as most of it is tax payers' money.
ReplyDeleteJia Rong 0927
As much as I hate to say it, we need this executives to stay in business and if giving bonuses is a way of keeping them then so be it. We need their wisdom and experience to get us out of this crisis, simply rioting and protesting would only make things worse. This executives might feel threaten and quit their jobs causing a whole new set of problems. Hey, if they were smart enough to get us into this crisis then maybe they'll be smart enough to get us out of it. But right now, having vengeance and grudges would not solve anything. The reason why i didn't say anything about the 90% tax on bonuses is because 10% of $US 1million is still a lot of money. And it really doesn't affect much of anything.
ReplyDeleteMy perspective of this issue is that AIG is not totally wrong in this fiasco. The fact that AIG executives are of reputable status in the sector would strengthen the fact that they might be poached by other companies. Giving out bonuses would be one of the many methods to attempt to retain the management level. What good would it be if the funds were channeled to other segments of the company, yet there is a lack of capable leaders. After all the company would just run into another crisis sooner or later.
ReplyDeleteAs for the case which whether the executives deserves the bonuses should not be based on a single downfall. No one complained when the company was enjoying good times, why would many years of success be overshadowed by just a single failure. Is it really right to label the executive as liability and judge whether they deserves the bonus based on a single scenario?
And while everyone is blaming AIG, did anyone noticed that the plan to hand out bonuses was actually not objected, or should we say not brought to the White House's attention as quoted in the report, "AIG informed the US Federal Reserve three months ago that it would pay the bonuses on March 15, but the Fed failed to notify Treasury or White House officials for months"
Therefore, I believe that the many factors were brought into the fray which ultimately resulted in the problem, and the AIG should not be the one shouldering the blame.
weechuen - 0927
I strongly believe that by imposing a 90% tax on the top executives of AIG, the US government is just showing fairness and at the same time utilizing the opportunity to claim back the 170 billion dollars issued to save the company. By doing so, the government will get to control the financial areas of AIG as most of the money will go to them instead of the top executives who we have no idea how they are going to spend the money. This way the people will feel more secure as they know that their money are not being luxuriously spent away but that their government will make good use of it. In addition to that, justice is served as the top executives will also not be overpaid. It is only natural that a bailed-out company should not be too comfortable in handling money especially when they know very well that it is not theirs. It is good that the US government did what they did because if in the near future, even after the bail-out, AIG somehow goes into bankruptcy again, people will be even more outraged and will want to know how the money in spent. This also gives the newly elected president a chance to show the people how he handle such issues so that they will have more confidence in the government in future. It is a good decision to impose the 90% tax on these people because people do not take financial issues light heartedly especially during a recession and will definitely be angered if they find out that the one company they put their hopes and money in, are overpaying its employees. Therefore, to avoid emotional conflicts, the government made a wise move in my opinion.
ReplyDeleteAIG had handled the bailout funds in a very irresponsible and inappropriate manner. I feel that the purpose of the bailout funds is to improve the global economic downturn and I think that giving bonuses to the AIG executives will not help to revive the economy at all. Thus, I feel that the objective of the bailout funds is not met. The sum of $165 million dollars has been 'wasted'. The government should look into this situation seriously and make sure the bailout funds will be used appropriately. Since AIG is unable to make full use of the bailout funds, the government should assist AIG fully. I feel that using bailout funds to revive the economy is not very effective as this current economic situation is like a endless pit. The government can be seen pumping in so much money already but there seems no end to it. Therefore, I do hope that the methods or means of reviving the economy should be reviewed constantly.
ReplyDeleteIn my opinion, imposing the 90% tax on bailout bonuses may recover the government’s money back. But I think the US government should have considered what could be the possible results and implications before giving the bailout fund to American International Group (AIG). Instead the government just threw the money into the hand of AIG. Furthermore, AIG had distributed the fund which was helping them rebuild its economy to the top executives as bonuses. I think they should have tried to cut the cost since they had just barely avoided bankruptcy with the help from US government. But AIG kept increasing the bailout amount to 170 billion dollars. Therefore, the US government has decided to impose the tax as a result.
ReplyDeleteIn my opinion, their reputation will be badly hit as they had used the money in the wrong way and therefore, if such situation happens again in the future, the government may not be willing to give large amount of money to help them anymore.
Aye Myat Mon
(0927)
I think imposing a 90% tax on bailout bonuses by the American government is a very good idea. Since taxpayers are indirectly paying for these bonuses, its better to show them that their money is spent wisely on saving the economy. If this taxation is not imposed, the bonuses will only appease and benefit the top executives at AIG and offend the taxpayers. After all, some of these top executives are the ones that were partially responsible for almost leading the company to bankruptcy. Hence, I support the US Government in its decision.
ReplyDeleteGoh Hong Shih 0927
I will definitely support the majority as the reasons that everyone has given are totally accurate. The United States used to be the top in the world and now, she has sunk down to the lowest ever since the financial crunch. The main reason is none other than the inappropriate usage of their money. It has all started with those high ranking executives. With their high paying salary monthly, they can spend whatever they like and when there is a crisis, they will just take the money and disappear. These are despicable acts from those who are wasting their own company's finance. Moreover, when the U.S economy is now facing such difficulties, AIG is still willing to fork out such a huge amount to provide bonuses to the executives. What's worst is that now that the government has even forked out huge sums to sustain AIG and yet they are here spending away taxpayers money. I really wonder if Obama did the right thing by trying in such huge amounts to help out.
ReplyDeleteIn my opinion, i think that giving out bonuses to companies that requires US to pump in fund to bail them out is already a mistake. If removing bonuses will results in massive strikes from the executives, there are many more people out there that has the same capabilities to handle a company, and would not be blinded by greed. Giving out bonuses is out of the questions until the US can turn their, as commended by Obama in today's paper, big ship around. This scandal would result in unrest as the massive bailout budget's approval has been questioned by the public since before it was granted. On the other hand, the government managed to salvage the situation by a tweeny bit in voting to " slap a 90 percent tax " on bonuses for bail-ed out firms. However, in my opinion, if such scandal continues, it would be very hard for US to return to their past glorious times. And that would eventually affect countries like Singapore which has export trades up to 3x its GDP.
ReplyDeleteCT 0927, I'm really proud of you! So many of you responded to my request so promptly. I'm very pleased with all of you and I'm really loving this Civics Tutorial class of mine! And your views show how astute you are and I'm quite impressed with your command of the language too.
ReplyDeleteAnd to all those from CT 0919 and CT 0924, thank you for your promptness in completing your homework.
There's a second piece of work which I would like you to do. Please go to 'Education Today - what do you want' and give your views.
The government gave 170 billion dollars to save AIG. However, AIG spent 165 million of it as bonuses given out to their high executives. In a economic recession, the government is already in need of money and yet it spent more money to try to save AIG but AIG used a portion of the bailout as bonuses to the executives. I think that AIG gave the executives high bonuses in order not to have them to quit. However in times like these, the executives should know that they should save money and help the company to survive and not taking free money with large values. I think the government slapping a 90% tax on those people is a right move as the government can retrieve the misused money and use it for the better. As for now, the taxpayers would be angry at AIG, once the government managed to retrieve the money back, it would have gathered more support from the taxpayers. Hence it is a win for the government from the taxpayers.
ReplyDeleteKai Jie 0927
I really think that its about time the US government take action to stop spending money in all these inappropriate ways. Whats the point of giving the bailout funds when organizations like the AIG are spending them like its their own money and that nothings happen to the world out there? Lets just face the truth, if these bailout funds are continued to spend in these most outrageous ways, then the world's economy will most probably sink to the bottom of the pit. So I think its really about time the US government sit down and think about ways that could really help the situation and not worsen it.
ReplyDeleteBy: Shen Song
I support the US government for imposing a 90 per cent tax on bonuses for AIG executives because in the first place, the US government had the intention of reviving the economy when they pumped in money to help AIG, saving them from bankruptcy. However, due to unwise decisions made by AIG to use the rescue funds given by the government to pay the top executives showed that the intentions of the government is not met. I don't see how the personal gains of each employee could help to benefit the entire economy. Therefore, it is absolutely right that the government is imposing taxes on the bonuses of the executives, recovering back the money which should not have been used in such an inappropriate manner. It is also assuring that the government has taken actions with regards to the issue.
ReplyDeleteEven though AIG did not really met the popular demand, it's decision on giving out bonuses in such huge extend may be one of the methods to ensure that their company could sail through the economic crisis with the full support of it's own workers, moreover those who occupy the major positions in the company. This decision made by AIG may not actually get positive response from the public as most of the people had actually been wasted but seeing the issue in another perspective, we can see that this decision is similar as making a long term investment where this huge company could eventually bring us out of this critical time through stabilizing the structure of the company. This bonus could be seen as an incentives or even a safety net where AIG could still function even if anymore incident happen beyond their control.
ReplyDeleteHowever, the government's action could be considered a good counter plan such that the advantages given to such big companies would not be abused while the general population could actually see where their money are going to while being put to much more practical uses instead of such long term policy. Thus eventually there would be no party who had actually benefited from this incident which was actually being started due to the carelessness of the us government and the inability of AIG for listing the priority of dealing with the public's expectation.
The US government's move will certainly not help the US's banking industry as bank executives will most likely repay their Troubled Asset Relief Program(TARP) funds as soon as possible or even avoid it at all cost. These executives would not want to be involved with the bailout funds as it would not only subject their banks to intense public scrutiny but will now also directly affect their paychecks as well. However, this will negatively affect the US banking system as fresh capital is exactly what banks in the country need right now.
ReplyDeleteMoreover,these bonuses were 'retention bonuses' and was put in place last year because AIG knew its company was going to collapse, and it didn't want to lose its best people to its competitors.These money had to be given to its best people, or they'd leave and deal the company a fatal blow, because it would be hard for AIG to replace its best performers in the current situation.
Hence, i feel that the US Government's decision was rushed through too quickly due to the need to control the outrage among the general public in America and more thought should have been given.
Looking at all of the opinions given, I have come to conclude that we should really first ask, what was the actual intention of AIG handling out the bonuses? Similar to what Alexander had said, do we really know why did AIG gave the bonuses? Is there any concrete reasons to why AIG had done what they did? Just like what Alexander had said, if their reason of giving out such huge bonuses was just to keep the executives in the company, then it is understandable for such anger. True, what AIG had done is ridiculous, especially in times of recession. However, not being biased, I strongly feel that we should really look closely into the matter and not just to jump into conclusion. Just as WeeChuen had stated, the blame should not just be aimed at AIG but also to other parties involved. According to Weechuen,"AIG informed the US Federal Reserve three months ago that it would pay the bonuses on March 15, but the Fed failed to notify Treasury or White House officials for months". This just proved that the handling out of bonuses was overlooked by the officials and they failed to take into account what serious consequences might happen. So to conclude, what I had meant to say is that we should really consider what was the real intention for the bonuses first before we start blaming the company. Like I had said previously, if the motive was to keep the executives in the company then I think that the tax imposed is a good way to be fair to the public.
ReplyDeleteKenneth 0927
The House Democrats have passed a vengeance tax financial firms that amounts to a 90 percent marginal tax rate on bonuses.This could be the ultimate class-warfare spread-the-wealth redistribution scheme, aimed directly at punishing sucess and penalizing the so-called rich. The point is that a 90 percent tax rate on financial bonuses is so punitive that it wil surely drive away the best and brightest from the very banks that mush heal the credit system.
ReplyDeleteI believe that republicans who just voted for massively high marginal tax rates had better think twice. And they also should have considered consequences and implications of the bailout fund which are abused by the biggest well-knowned insurance company, American international Group, before it actually happened.
Lim Subin ( 0924 )
I think the imposing of taxes on the bonuses given to high-ranking executives is a wise choice as they are merely doing what they deem is right, by recovering back money that is being misused by AIG.
ReplyDeleteThe $165 million aid given to AIG can then be put to better use and hence, alowing taxpayers to have a piece of mind, knowing that their hard-earned money are not going to people who are most probably receiving higher pay than them but to the government fund where it may aid in reviving the ailing economy.
In this way, it will most probably be a win-win situation for both the US government body as well as the taxpayers.
(Yuqing 0927)
ReplyDeleteI believe that the US government has made a right move to slap a 90% tax on bailout bonuses for top executives at bailed-out firms like AIG.
This was in response to the overwhelming debate over the colluding decisions made by AIG to have spent almost one-tenth of the huge amount of US$170billion bailout from the govenment.
It is absurd to be spending on the bonuses of top executives during the aftermath of a financial breakdown. And, the government could regain the community's confidence by imposing a 90% tax on the bonuses paid.
Therefore, this is definitely a wise and impartial decision by the US government to resolve the issue.
yuxi0924
ReplyDeletei agree wif wat zhiyun and brendan say american government is doing a right thing to so call punish the company by tax bounes,as they have achieve nothing but make a billions of lost in last quater. and i think the action also a matter for the government obama to save himself as this event rise peoples anger not only towards AIG but also government itself.
I think 90 pct tax on bailout bonuses will be able to get back part of the money given out but the there will be negative consequences too. A huge number of higher ranking workers with higher abilities who wanted to stay with AIG are now resigning, this will severely affect AIG due to the loss of man power. Although i support the plan of getting back the extremely unacceptably high bonuses given to AIG workers, i think the government should have a more careful consideration on the method of the plan.
ReplyDeletexinhua L. 0927
Thank you for responding. But could I appeal to all of you to use Standard English, please.
ReplyDeleteBailouts used as bonuses may have it uses, but shouldn't the government keep track of what is it that the receivers do with the money? This is the problem with capitalism. Almost all contributions are motivated by greed and materialistic wealth. No doubt that the government has done well to tax 90% of the bonuses, but still, the company is clearly corrupt. Even in the name of motivation, it is certainly not acceptable to be so flamboyant with the bailout from the government. Who knows what is going inside the executives' heads? I believe most of them have already earned millions if not tens of thousands and therefore should have no problem with living even if they resign right away. Money to them have already become obsolete. So motivation through giving bonuses is clearly illogical. What's more, the bonuses are given beforehand, before any contribution of any sort is made. They can jolly well just take the bonus and leave the company. Then who's gonna account for the bonus now? It's all about the rights of the company and its executives. The have become so powerful and self-confident that even the government's bailout is spent so carelessly with no thought on the implications. This action by the government, that is, forcing AIG into giving up their bonuses, may further increase the conflict between the two groups. Which may in turn cause America's, even the whole world's, economic structure and system to go through a dramatic change. Will the execs heave the world depending on their fortune made through stocks and shares? Or will capitalism finally take its toll and be forced through a revolutionary change which may reshape the world?
ReplyDeleteJohn Zhou Kun 0927
Sorry to double post, but on the topic of AIG's execs being poached by the other companies, I believe that would do little or no harm to the economy, as no matter who these execs are working for, as long as they can get the money flowing, no matter for which company, it will still help the crisis. And I believe that during the "good times" the execs would have most probably got their well-deserved paychecks and bonuses, or else they would nhave hopped long time ago, unless they have low demands, that is. But if they really have low demands, giving out bonuses during economic crisis still isn't going to change anything.
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