US Congress to vote on 90 percent tax on bail-out bonuses

March 20th, 2009 - 12:32 am ICT by IANS  

Washington, March 19 (DPA) Spurred on by public ire over bonuses paid at firms that received government bail-outs, the US Congress Thursday was considering a 90 percent tax on executive bonus payments by companies receiving more than $5 billion in federal funds.
The action, which the House of Representatives could vote Thursday, comes amidst furore over bonus payments by American International Group (AIG), the world’s largest insurance firm whose near failure in September 2008 helped push a teetering US financial system into rapid descent.

With an estimated $180 billion government bail-out keeping AIG afloat, the company paid $165 million last week in retention bonuses to 4,600 traders in the financial products unit whose investments and insurance coverage of subprime mortgage securities are at the heart of the problem.

“Most Americans believe a bonus is something paid for a job well done,” said Democratic Representative Charles Rangel. “The whole idea that they would be rewarded millions of dollars is repugnant … to any sense of decency.”

Rangel, chair of the Ways and Means Committee, said the “red light” was flashing on the practice.

House Republicans say the bill is a sham, and are demanding that all of the bonus money be paid back.

The 90 percent tax would apply to people earning more than $250,000, including bonuses, and would stop when the US government’s investment in the company falls below $5 billion. Foreign employees would not be affected, according to Bloomberg financial news service.

The US Senate is working on a separate version of the measure to impose a 70 percent tax on the bonuses that would also include foreign workers. No date has been set for Senate action.

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