Tax News

CCH (cch.taxgroup.com) reports:

  In the face of increasing outrage, House lawmakers will consider legislation on March 19 that would tax the bonuses paid to employees of American International Group (AIG) and other firms that received bailout money under the Troubled Asset Relief Program (TARP). House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., introduced legislation to impose a 90-percent tax on bonuses received by married individuals with adjusted gross incomes of more than $250,000 ($125,000 for married filing separately). "When you weigh the harm that AIG and other bad actors have done to the system, our economy, and American families, with the concerns regarding the precedent of using the tax code, there is no question this legislation is the best decision we can make," said Rangel.

  Under the legislation (HR 1586), the tax would only affect employees of companies that received more than $5 billion in federal TARP funds. The legislation would affect bonuses received after January 1, 2009, and would cover companies that received more than three-fourths of financial rescue funds already distributed, according to the committee. The legislation would not affect commissions, welfare or fringe benefits, or expense reimbursements. It would also apply to employees of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

  Ways and Means member Mike Thompson, D-Calif., joined Rangel and other committee members to call for swift action by Congress to eliminate the bonuses. "It goes against the ideals of capitalism to reward the people that helped create this economic mess. It's even more outrageous that taxpayers are footing the bill," he said. The AIG bonuses are sure to be a topic of discussion at a Ways and Means Oversight Subcommittee hearing on March 19. Neil Barofsky, special inspector general for the TARP, and Gene Dodaro, acting comptroller general of the Government Accountability Office, are scheduled to testify.

  By Stephen K. Cooper, CCH News Staff

Senate Finance Committee Memorandum: Proposal for Executive Compensation Legislation

House Ways and Means Committee Release: Chairman Rangel Introduces Legislation Taxing Executive Bonuses Paid to Companies Receiving Federal Assistance

House Release: Thompson: Quickly Pass Executive Bonus Legislation

Legislation to Impose an Additional Tax on Bonuses Received from Certain TARP Recipients,
HR 1586