House Passes Bill Taxing AIG and Other Bonuses

Acting swiftly, the Democratic-led House approved a bill Thursday to slap punishing taxes on big employee bonuses at firms bailed out by taxpayers.

AIG Chairmen Edward Liddy testifies on Capitol Hill in Washington, Wednesday, March 18, 2009, before the House Capital Markets, Insurance and Government Sponsored Enterprises subcommittee.

(Susan Walsh/AP Photo)

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money.

"We want our money back now for the taxpayers," House Speaker Nancy Pelosi said.

Democrats led the charge in an attempt to get in front of raging public anger over the AIG bonuses, even though a provision that would have made such payouts illegal was stripped from last month's $787 billion stimulus bill by its Democratic sponsors.

The vote to tax back most of the bonuses was 328-93. Voting "yes" were 243 Democrats and 85 Republicans. It was opposed by six Democrats and 87 Republicans.

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The bonuses, totaling $165 million, were paid to employees of troubled insurer AIG over the weekend, including to traders in the unit that nearly brought about the company's collapse.

The wide margin of victory came despite sharp Republican attacks calling the legislation a ploy to paper over Obama administration missteps.

Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" to divert attention from why the administration and congressional Democrats had not done more to block the bonuses.

However, although a number of Republicans first cast "no" votes, the political appeal of the legislation apparently won the day. In the closing moments of the roll call there was a heavy GOP migration from the "no" column to the "yes" side before the final vote was called.

Democratic leaders rushed the bill to the floor under a procedure that requires a two-thirds majority for passage.

Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses, nullifying the payouts.