It was recently reported that AIG, which has received close to $200 trillion from the government, is about to pay out $165 million in bonuses. This is truly disgraceful and an excellent reason why the company should go into government receivership. The government already owns 80% of AIG and has injected it with capital far in excess of its worth.
Hope to stop the bonus payments seems slim. According to AIG, they are contractually obligated to pay these “bonuses”. If AIG can't stop itself from giving away tax payers' money, the government should move quickly to recover it.
My suggestion is that Congress moves quickly to pass the “Bailout Bonus Recovery Tax.” It would be a one-time tax increase this year only. It would be a 90% tax on any bonus over $50,000 from a company which had to be bailed out by the government. I feel a limit of $50,000 will make sure the tax only affects the traders and managers which made the bad decisions and ruined their companies. It seems only fair that if companies are using tax payers' money to pay huge bonuses, that the government should impose huge taxes on those bonuses.