Measure targets employees of firms receiving bailout
WASHINGTON – Struggling to keep ahead of public outrage, the House of Representatives on Thursday passed a bill to recoup most of the $165 million in bonuses paid to executives of American International Group, although its efforts were immediately swamped by news of more migraine-inducing corporate conduct.
A prominent congressman said Thursday that 13 financial companies that received an injection of government money owe more than $220 million in unpaid taxes.
And Bloomberg reported that Citigroup Inc., which has received $45 billion in federal money, planned to spend $10 million for new offices for its top executives.
The House measure, hurriedly drawn up on the orders of the Democratic leadership, imposes a 90 percent tax on those who were paid bonuses at AIG and other companies as long as their families earned more than $250,000 annually and their companies received more than $5 billion in federal bailout funds. It passed by a vote of 328-93.
The Senate is taking a different approach. It is readying a bill that would levy a 35 percent excise tax on executive bonuses. Both the company and the recipient of the bonuses would pay the tax. The Senate could take up the measure next week.
The House bill, sponsored by Rep. Charles Rangel, D-N.Y., garnered significant Republican support. But that did not come without a bitter debate, with conservative Republicans angrily denouncing the measure as a political charade intended to deflect blame from Democrats about how the AIG bonuses were permitted to be paid in the first place.
They remained focused on an embarrassing disclosure by Senate Democrats on Wednesday that they had acceded to a Treasury Department request in February to scale back language in the economic stimulus bill that would have limited the payments.
Opponents of the current deal advocated a separate plan that would require the Treasury Department to seek repayment of the funds immediately. And some suggested the bill was an unconstitutional attempt to penalize a specific company, though legal experts said Thursday that the bill would probably pass muster in the courts.
Supporters said the bill was the most effective means for the government to seek redress of the bonus money.
“This vote is the difference between solving the problem or continuing the problem,” said Rep. Steve Israel, D-N.Y. “The only way to get their money back is to tax it back.” Some Republicans agreed. “At the end of the day, this insult to taxpayers can not, should not, and will not stand,” said Rep. Dave Camp of Michigan.
At a hearing early Thursday, Rep. John Lewis, D-Ga., revealed that a House subcommittee inquiry had revealed that 13 companies that received federal assistance owe more than $220 million in unpaid taxes. Companies that participated in the government bailout program were required last fall to certify that they did not owe back taxes.
“If we looked at all 470 recipients, how much would they owe?” Lewis asked at the hearing. “This is shameful. It is a disgrace. The American people are fed up, and they are fired up. And they are not going to take it any more.”
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