Payback Time? House Approves Bonus Tax

House passes 90% tax on bonuses from AIG, other bailed out companies.

ByABC News
March 19, 2009, 1:04 PM

March 19, 2009 — -- In a move to quell the growing outrage over the massive bonuses given to employees of companies such as AIG, the U.S. House of Representatives voted today to heavily tax the money doled out by large companies that took federal bailout money.

As they debated the bill, Democrats said enough is enough.

"The American people have said no, and they have said, 'Hell no, give us our money back,'" said Rep. Earl Pomeroy, D-N.D.

New York Democrat Charles Rangel said the companies need to "stop the thieving at taxpayers' expense."

"The only way to get their money back is to tax it back," said Rep. Steve Israel, D-N.Y.

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Approved 328 to 93, the bill would slap a 90 percent tax on the bonuses of any employee making more than $250,000 at any company that received federal bailout money.

However, the angriest voices today came from Republicans. They accused Democrats of making the bonuses possible.

"Listen, this bill is nothing more then an attempt for everyone to cover their butt up here on Capitol Hill," said House Minority Leader John Boehner, R-Ohio. "It's full of loopholes."

Rep. Jeb Hensarling, R-Texas, echoed the sentiment, telling his colleagues, "Don't come up with this political cover-your-backside language, trying to excuse all the people who are responsible for this in the first place."

Rep. Michele Bachmann, R-Minn., called the matter a "scandal that's brewing in Washington," and said, "We need to have answers."

At issue is a tiny provision in last month's stimulus bill that exempted contracts signed last year from limits on executive compensation. Call it the AIG loophole.

The loophole was part of measure written by Sen. Chris Dodd, D-Conn., but he told ABC News that it was the Treasury Department that pushed for it during closed-door negotiations with House and Senate leaders.

"I was not in the room," he said.