Rep. Israel: 100% tax on AIG bonuses

	Bomb threat at SBU campus
	Woman charged with bank robberies
	Pols reject idea of taxing employers for MTA
	H'fields cuts would save about a dollar a day
	Three incumbents will run again
	Rally for clean water this weekend
	Anti-LIPA coalition formed
	Shrinking revenue stream in Brookhaven
	Police investigate BJ's 'arson'

Extras

	comments to this article
	letter to the editor about this article
	print this article

March 17, 2009 | 04:35 PM
Rep. Steve Israel (D-Huntington) introduced legislation Tuesday that would tax 100 percent of large bonuses awarded to employees at companies taking federal bailout funds.

The move comes just days after insurer American International Group Inc. drew extensive criticism for giving $165 million worth of "retention" bonuses to its employees despite having received extensive taxpayer funding to avoid bankruptcy last fall. AIG came perilously close to collapse due to its unregulated backing of banks' "toxic" mortgage-backed security investments through credit default swaps.

The federal government now owns close to 80 percent of the mammoth insurer. With AIG arguing that the bonuses are legally mandated in employee contracts, the first payments were made last week, although the Obama administration has announced intentions to reverse the payments if possible.

Israel's bill would target those AIG bonuses as well as any paid out by corporations that have taken federal funding through the Troubled Assets Relief Program. As of Tuesday, the bill already had 26 cosponsors.

"American families shouldn't be forced to reward these professional financial failures with extravagant bonuses that could buy fancy cars and yachts," said Israel, a House Appropriations Committee member. "AIG may not like it, but since they had to come to the federal government for help, the federal government now has a say in how they spend taxpayer money."

He added, "If we can't kill the bonuses, we'll tax the bonuses."

The IRS withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million dollars. Israel's proposal, The Bailout Bonus Tax Bracket Act of 2009, would tax bonuses over $100,000 disbursed to employees of companies receiving TARP funds. Bonuses would be taxed beginning with those disbursed this year.

Last week, Israel announced that he would no longer seek federal earmark funding for profit-making groups.

Search The Site