You run a major bank with nationwide influence. Think: ShmoopiGroup. You play a little fast and loose with some of your more complicated derivative bets, and suddenly, you're in danger of a bankruptcy.
Unfortunately for the national economy, your bank is so big that the bankruptcy would likely spark a massive negative market response. Like...you could crater the country's entire economic structure. But, fortunately for you, the government isn't going to let that happen. Politicians approve a bailout. You receive $1 billion in taxpayer funds to save your bank from bankruptcy. "Great!" you think, "the corporate retreat to Boca Raton is back on!"
But the government has different ideas about how you should spend that money. When they find out about the Boca Raton trip (and some of the other perks you used bailout funds for), they invoke their tax clawback clause.
This provision of the bailout agreement lets the government take back some of the money they gave you. "Claw it back"...like if you tried to pull a zebra carcass away from a hungry lion. The government will impose a higher tax rate on you for the next few years, taking back some additional funds from your bank in order to repay taxpayers for the money the politicians think you misspent.
Related or Semi-related Video
Finance: What is the IRS?19 Views
Finance allah shmoop What is the i r s Well
i rest might be the three most hated letters in
the alphabet Well after d m v a pms and
well maybe std The i r s is the internal
revenue service Their internal i e inside the government they're
in charge of collecting revenue A k a They take
money from your pocket in the form of taxes and
they deliver it to uncle sam and they you know
service you and it doesn't feel good So yeah these
are the guys from the us treasury department who checked
to make sure you filled out your income tax forms
correctly and submitted the proper amount And if you screwed
up in any way they will let you know about
it and a half in the form of angry letters
Phone calls knocks on your front door rocks through your
back window Whatever it takes to get you to pay
your fair share of taxes Like why should you get
away with not paying when the jones has paid all
they owed Or the irs can do even worse and
audit you with an audit he irs will request extensive
and very specific information and records from you Paycheck deductions
all kinds of things You claim that you did that
were deductible that may or may not have been forcing
you to spend hours upon hours at your public storage
unit digging through boxes you hoped and prayed you'd never
see again Well after the third solid week of having
your financial history poked and prodded like you've had to
turn your head and cough you uh might actually be
ready and willing to trade in those three letters of 00:01:35.13 --> [endTime] irs for rough one of those stds instead
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