Give Back That Bonus!

Speaking of the AIG bonuses and the punishing tax on them as contemplated by Congress, giving back those bonuses may not be a good strategy either:

So, you still work for AIG, having decided not to desert a sinking ship. For this you received a retention bonus, but the politicians have decided to make a scapegoat out of you. Last week the House passed a bill that would tax your bonus at 90%--which, since you live in high-tax New York City, means you'd end up paying more than 100% when you add up all the taxes. . .

In light of all this, you do the right thing and give the bonus back.

Sucker!

What follows is a not-as-convoluted-as-you'd-think calculation which makes the 90% proposed tax a bargain compared to the effective rate of up to 130% depending on which strategy you use turn yourself from a bad guy into a good guy.

To be clear, I don't like the AIG bonuses either. But taxing them at 90%? That just ain't right.