U.S. House OKs 90% tax on bailout firms' bonuses

Mar 20, 2009

07:31 AM CDT on Friday, March 20, 2009

WASHINGTON – Lawmakers, spurred by rising public anger, voted Thursday to impose a 90 percent tax on bonuses paid to high-income employees by companies getting big government bailouts.

The action in the House was the first move toward reclaiming taxpayer dollars going into such bonuses. The bonuses are widely seen as rewarding executives who had a hand in the troubles at giant American International Group Inc. and other bailed-out companies.

The House bill would impose the 90 percent tax on bonuses given to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

The House vote was 328-93 to impose the tax. Similar legislation was introduced in the Senate late Thursday.

“This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite,” Rep. Earl Pomeroy, a North Dakota Democrat who voted for the bill, said Thursday. “These bonuses represent a squandering of the people’s money. … Starting right here, right now, we are saying, ‘no more.’ ”

Some members of both parties raised doubt about whether the legislation could survive a court challenge, saying it was tantamount to a retroactive “bill of attainder,” which is banned by the Constitution. Even backers of the bill acknowledged it amounted to an extraordinary use of tax law.

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