Food for Thought: 90 Percent Income Tax Kills TARP Institutions

Congress is about to destroy its Troubled Asset Relief Program (TARP) investment in America’s major financial institutions.

-The most productive employees of these institutions make well in excess of $250,000 a year.

-Most of these employees have an actual or implied contract that permits them to make compensation in excess of $250,000 per year based on achieving certain goals.

-These employees ride up and down the elevator every day.

-These productive employees are in high demand by other institutions and boutique firms.

-If their income is capped, there is nothing to keep the best employees at Goldman Sachs, Morgan Stanley, Citibank, Bank of America and AIG.

-They will leave these TARP institutions where their income is capped and take up new employment in non-TARP institutions where they can earn well in excess of $250,000.

-Those remaining employees making less than $250,000 are the least productive employees and will not be able to make these financial institutions survive.

-The most important asset these TARP institutions have is this group of productive employees. Without these employees, their business will not survive.

-If the Senate passes the same 90 percent tax bill that the House passed, there will be a massive exodus of productive employees from these firms to non-TARP firms and the TARP institutions will fail.

-The American taxpayer can then thank the U.S. Congress and president for throwing away $750 million of TARP investment in these financial institutions because their judgment is clouded by envy.

-I suggest every American short these financial institutions so they can recover the future tax increases required to cover this lost investment.

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