One lesson I’ve learned over the years is to ask the right question.
Which is not what’s happening these days as politicians wring their hands over the huge pay packages being granted by financial firms that have been bailed out by the government.
They’ve even appointed a Pay Czar. Give me a break.
The right question to ask is,
Is anyone paying taxes on these bonuses?
Because if they are, then we taxpayers are getting about 50% as payback.
On the other hand, depending on how things are structured, they might be playing Creative in the Caymans, instead of paying income tax.
Cayman (Island) tax laws also help American fund managers legally defer domestic taxes on their personal profits by channeling them offshore through their funds.
Now we don’t know that this is the case with our current crop of Bonus Babies, and I would never imply that such a thing is happening.
But wouldn’t it make sense to ask where that money is going?
The whole thing reminds me of a nice honest game of Three Card Monte.