I have one initial thought about the uproar over the bonuses at AIG, although I plan to offer some more in my column this week.
The US Congress is now so angry about the $165m in retention payments to employees in AIG’s financial products group that it wants to impose a tax to recoup the money, or perhaps 90 per cent of it, from anyone who gets such a bonus.
As I understand it, these employees are split between the units offices in Connecticut and London. Presumably, the Internal Revenue Service will be able to extend its long extra-territorial arm to tax the bonuses of those employees in London who are US citizens.
But what about recipients who are neither American nor based in the US? I would have thought that, on the principle of no taxation without representation, the IRS cannot touch them.
Incidentally, I have just asked AIG how many of the employees work in London and how many in Connecticut. It said it did not have the figures to hand.
