Outrageous Bonuses for Executives

President Obama has the right idea by capping the bonuses for the executives of the companies receiving bailout funds. $500,000 is a good limit. Enforcing it may be an issue but there are simple ways to ensure compliance. One would be "special performance bonus taxes" on bonuses over $500,000 for both the company and the employee.

The employee would have to pay 50% on every dollar over the $500,000 limit. This tax would be separate from income tax and non-refundable. The tax rate for the business would be 100% for each dollar over the limit and also non-refundable. Income generated from this tax would go directly to paying off the national debt.

Let's use a $6,000,000 bonus to a CEO for an example. A bonus of that size would generate $8,250,000 payment towards the national debt; $5,500,000 from the business and $2,750,000 from the CEO. Looking at past outrageous bonuses given by businesses applying for bailout funds, the national debt could be paid off in just a couple of years.

If the company can only afford a total of $6,000,000 in bonuses for that employee then they need to pay the employee $3,250,000 and a tax of $2,750,000. The employee would pay $1,375,000. This would still generate $4,125,000 for the national debt. It is simple, if a business firmly believes that someone has performed well enough to get an obscene bonus, then national debt should also benefit from this stellar performer.
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