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House to vote on taxing AIG bonuses

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March 19, 2009

Venting their outrage, lawmakers are preparing to slap heavy taxes on employee bonuses at insurance giant AIG and at other companies that have received large bailout packages from the government.

The House was scheduled to vote Thursday on a bill that would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.

"We figured that the local and state governments would take care of the other 10 percent," said Rep. Charles Rangel of New York, chairman of the tax-writing House Ways and Means Committee.

Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money.

House Democratic leaders unveiled the bill as the head of embattled American International Group Inc., which has received $182 billion in bailout money, testified about $165 million in bonuses paid out in the past week to about 400 employees in its Financial Products unit.

Edward Liddy, who was brought in last year by the government to run AIG, told a House subcommittee Wednesday that the company was contractually obligated to pay the bonuses but that some of the recipients have begun returning all or part of them.

Liddy said that on Tuesday, he had "asked those who have received retention payments in excess of $100,000 or more to return at least half of those payments." Some have "already stepped forward and returned 100 percent," he added.

Lawmakers rushed to the microphones after word of the bonuses was leaked out by the government over the weekend. Bills were quickly drawn up in both the House and Senate to impose heavy new taxes on them.

The top two members of the Senate Finance Committee on Tuesday announced a bill that would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent excise tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

President Barack Obama, who took office just under two months ago, told reporters Wednesday that his administration was not responsible for a lack of federal supervision of AIG that preceded the company’s demise.

But Obama added, "The buck stops with me."

Obama said his administration was consulting with Congress on creating a new "resolution authority" to seize giant institutions like AIG — including all their toxic assets — whose collapse in normal bankruptcy could cause calamity in the financial markets.

Republicans have pointed their criticism at Treasury Secretary Timothy Geithner, questioning how much he know about the bonuses in advance and efforts by the administration to stop them. And they complained anew about being locked out of discussions earlier this year when Democrats decided to jettison a provision in the economic stimulus bill that would have revoked the payments.

"The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate. There was no transparency," said Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee.

3 Responses to House to vote on taxing AIG bonuses

  1. woody188

    March 19, 2009 at 4:17 pm

    I will be very surprised should any of these bills pass. I could only see it happening if Congress really is scared of losing control over the nation.

  2. Carl Nemo

    March 19, 2009 at 4:48 pm

    Tax the bonuses…say what?!

    The money was initially tax-debtor dollars that haven’t even been paid yet and these Congressional clowns want to tax the very tax dollars that they so profligately handed out without proper oversight.

    Our entire process of government has moved into a “Through the Looking Glass” world as in “Alice in Wonderland”.

    All they have to do is order AIG to rebate the 165 million bucks to the U.S. Treasury with no further bonuses to be paid with out future employee performance reviews, although I would prefer to take back the entire 180 billion bucks they’ve already pilfered from U.S. taxpayers.

    AIG is a holding company that has a worldwide network of subsidiaries. It’s a virtual “blackbox” for money laundering activities. U.S. Treasury gives AIG aid; ie., corporate welfare and then they redistribute our tax money to a worldwide consortium of megabanks. How does that feel?! That’s also why the Federal Reserve and U.S. Treasury are less than eager to fess up as to how these handouts are being managed. The American people need to get it in their evidently thick heads that our government has been hijacked by duopolists; ie., “republicrats” who are both working a megascam for the same shadowy controllers. Obama and company seemingly are nothing but a variation of Bushco, one having played the iron-gloved “tough cop” while Obama and company pretending to be the friends of the people while still ripping us off bigtime and continuing business as usual…!

    *****

    Here’s the latest list of corporate welfare recipients, compliments of the AIG bailout Paulson and Bernanke set up.

    $12.9B Goldman Sachs
    $12.0B Bank of America/Merrill Lynch
    $5.2B Bank of America
    $6.8B Merrill Lynch
    $11.9B Societe Generale
    $11.8B Deutsche Bank
    $8.5B Barclays
    $5.0B UBS
    $4.9B BNP Paribas
    $3.5B HSBC Bank
    $3.3B Calyon
    $2.3B Citigroup
    $2.2B Dresdner Kleinwort
    $1.6B JPMorgan/Morgman Stanley
    $0.4B JPMorgan
    $1.2B Morgan Stanley
    $1.5B Wachovia
    $1.5B ING
    $1.1B Bank of Montreal
    $1.0B Deutsche Zentral-Genossenschaftsbank
    $0.8B Rabobank
    $0.7B Royal Bank of Scotland
    $0.7B DZ Bank
    $0.5B KFW
    $0.3B Banco Santander
    $0.4B Dresdner Bank AG
    $0.4B Credit Suisse
    $0.2B Citidel

    …list courtesy of WNI site (WhiteNoiseInsanity.com)

    This total does not represent the total amounts that have been “gifted” to these offshore banking parasites at U.S. taxpayer expense. Yep, they’re really helping the plain folks on main street…NOT! X-(

    Carl Nemo **==

  3. Jim Shelton

    March 19, 2009 at 9:37 pm

    I watched and listened carefully to Edward Liddy. His actions make perfect sense. The payouts were NOT bonuses. Congress has failed again. As a group, they are a bunch of clowns. I don’t think any of them could manage a silver ball in a room. They would damage it or lose it or argue about it…