Bill to introduce 90% tax on executive bonuses moves to US Senate
Punitive tax measures which would strip AIG executives and other Wall Street high earners of 90% of their bonuses will be considered by the US Senate next week.
Under the plan - agreed by a majority of 328 to 93 in the US House of Representatives - employees of bailed-out firms who receive incomes in excess of US$250,000 (€182,932) would be forced to hand back nine-tenths of any additional financial "rewards".
The proposals follow outrage over $165m (€120.7m) worth of bonuses handed out to about 400 staff at struggling insurance giant AIG.
The insurer was rescued from collapse last year following a federal handout of $170bn (€124.35bn).
Earlier this week, President Barack Obama described the payments as an "outrage", adding that AIG's financial woes were the result of "recklessness and greed".
The bonuses he referred to relate to payments promised to about 415 employees, most of whom worked at the firm's financial products division.
The "loyalty rewards" were agreed before AIG was forced to go cap in hand to the government. The government bailed out the insurer amid concerns that allowing its collapse could have far-reaching consequences and deeply worsen the global economic downturn.
As a result of its measures, the US government now owns 80% of the insurer.
The House vote yesterday saw 243 Democrats and 85 Republicans vote for the tax. It affects staff at firms which have received more than $5bn (€3.65bn) in rescue funds.
House speaker Nancy Pelosi said: "We want our money back and we want our money back now for the taxpayers."
The large margin of the bill's victory came despite opposition from some Republicans that it was a ploy to paper over mistakes made by Obama's administration which allowed the bonuses in the first place.
Speaking on 'The Tonight Show With Jay Leno' last night, Mr Obama said he was "stunned" by the bonuses paid to AIG executives.
"The immediate bonuses that went to AIG are a problem," he said.
"But the larger problem is we've got to get back to an attitude where people know enough is enough, and people have a sense of responsibility and they understand that their actions are going to have an impact on everybody.
"And if we can get back to those values that built America, then I think we're going to be OK."
