The legislators were so quick to act to solve the problem on AIG bonuses, which caused such an outrage since it was announced over the weekend that $165 million will be paid out to the same people who caused the downfall of the company. With a vote of 328-93, the bill sponsored by a Democrat proposed taxing the bonuses paid out by companies who received bailout money of $5 billion or more and made from the start of 2009 at a rate of 90%. This, however, excludes compensation including bonuses lower than $250,000, which would be taxed at the normal federal income tax rates. Charlie Rangel, a Democrat from New York and Chairman of the Committee on Ways and Means said: “These people are getting away with murder. They’re getting paid for the destruction they’ve caused to our communities.”
A Senate version to be proposed later today will have a broader coverage- applicable to all institutions which received federal assistance, regardless of the amount. However, taxation would only be at 70% and would be split between the company and recipients of the money.
Earlier today, an alternative proposed by Republicans that would have blocked additional bailouts until all the bonuses have been given back was rejected in the House.
Of course, if it’s taxation, it’s the Democrats. Some of the people from AIG have already given back the bonuses and as outrageous as this might be, I think it’s too rash a decision to be jumping so quick into this and solving everything by taxation.
For the legal junkies: