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House debates bill taxing AIG and other bonuses
Associated Press
Issue date: 3/19/09 Section: News
WASHINGTON (AP) - Democrats pressed for quick action Thursday on a bill to slap punishing taxes on big employee bonuses from firms bailed out by taxpayers. Republicans called it a legally questionable ploy to paper over Obama administration missteps.
"The American people demand protection and that's what we're doing today," said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee.
But Minority Leader John Boehner, R-Ohio, called the bill "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.
The bonuses, totaling $165 million, were paid to employees of troubled insurer American International Group over the weekend, including to traders in the unit that nearly brought about the company's collapse.
Democratic leaders rushed the bill to the floor under a procedure that requires a two-thirds majority for passage. The numerous Republican complaints about the measure during Thursday's debate raised questions on whether it would pass.
"The Democratic bill brought to the floor today is constitutionally questionable," said Rep. Mike Pence, R-Ind. "It's obviously a transparent attempt to divert attention away from the truth that Democrats in Congress and this administration made these bonus payments possible."
The bill 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 Rangel.
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.
A tax expert said there is plenty of precedent for levying punitive taxes on behavior that lawmakers find objectionable. Robert Willens, a corporate tax lawyer in New York, cited the steep excise taxes levied on money paid to firms to keep them from launching hostile takeover bids, known as "greenmail."
"The American people demand protection and that's what we're doing today," said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee.
But Minority Leader John Boehner, R-Ohio, called the bill "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.
The bonuses, totaling $165 million, were paid to employees of troubled insurer American International Group over the weekend, including to traders in the unit that nearly brought about the company's collapse.
Democratic leaders rushed the bill to the floor under a procedure that requires a two-thirds majority for passage. The numerous Republican complaints about the measure during Thursday's debate raised questions on whether it would pass.
"The Democratic bill brought to the floor today is constitutionally questionable," said Rep. Mike Pence, R-Ind. "It's obviously a transparent attempt to divert attention away from the truth that Democrats in Congress and this administration made these bonus payments possible."
The bill 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 Rangel.
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.
A tax expert said there is plenty of precedent for levying punitive taxes on behavior that lawmakers find objectionable. Robert Willens, a corporate tax lawyer in New York, cited the steep excise taxes levied on money paid to firms to keep them from launching hostile takeover bids, known as "greenmail."
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