Tuesday, March 17, 2009

Am I reading This Right?

The Washington Post, reporting on the AIG bonus scandal notes:

In the House, Reps. Steve Israel (N.Y.) and Tim Ryan (Ohio) introduced the "Bailout Bonus Tax Bracket Act" to create a 100 percent tax on bonuses over $100,000 that are distributed to employees of financial firms receiving federal bailout funds. Currently, the IRS withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million dollars.
If I'm reading this correctly (and hunting around the internet I'm finding confirmation) bonuses, which form a substantial portion of Wall Street employees' compensation packages, are taxed at 25% instead of the 35% they'd normally be assessed for income above $357,000. If I'm not missing anything then this would explain why Wall Street traders take so much of their compensation in the form of a bonus. It's a way to pay less in taxes than they otherwise would.

So it's just another way that the rich in this country evade paying taxes. Is this not the real scandal here?

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