Maloney Applauds Passage of AIG Tax Bill

Washington, D.C. – Congresswoman Carolyn B. Maloney (D-NY) today
applauded the House passage of H.R. 1586, which would impose a 90%
federal tax on bonuses paid by AIG and other companies that received
more than $5 billion in funding from the federal government’s Troubled
Assets Relief Program.  The bill, which passed the House by a vote of
328-93, would apply to bonuses paid after December 31, 2008 to those
with more than $250,000 in adjusted gross income.

On Tuesday, Maloney introduced H.R. 1542, the AIG Taxpayer Protection Act, which would have taxed these bonuses at 100%.  Maloney is also a co-sponsor of the bill that passed today.

“I’m proud that the House has taken action to return these bonuses to the federal treasury, a concept I introduced in legislation earlier this week.  It would be morally reprehensible and fiscally irresponsible to allow millions to go to those who cost our country billions.  Bonuses should be based on creating value, not destroying it,” said Maloney. 

“The days of ‘heads I win, tails the taxpayers lose’ corporate mismanagement are over,” Maloney added.  “I am grateful to Speaker Pelosi and Chairman Rangel for taking decisive action to correct the intolerable abuses at AIG.  It’s now time to get back to the business of rebuilding our economy, creating jobs, and restoring the public’s faith in corporate America.”

Fact Sheet on H.R. 1586:

■    As a result of extraordinary abuses of the public trust by companies rewarding employees with excessive compensation while receiving billions in taxpayer assistance, Congress today will consider legislation to recover taxpayers’ dollars.

■    This bill will hold companies -- including American International Group (AIG) and other companies receiving billions in taxpayer dollars -- accountable for the bonuses that were paid to their executives.  The bill would impose a new 90 percent income tax on bonuses received by individuals from companies which have received over $5 billion from the TARP.  Chairman Rangel and Reps. Israel and Peters have taken the lead on this issue.
 
■    After receiving more than $170 billion in taxpayer funds, AIG paid $165 million in retention payments to executives – most of whom have mismanaged their company into near bankruptcy.  The top recipient received more than $6.4 million and more than 73 of these executives were paid over $1 million in retention bonuses.  After receiving their retention bonuses, at least eleven recipients left the company. 

■    No taxpayer funds should be used to pay bonuses or other unjustified compensation to AIG executives whose irresponsible risk-taking brought our financial system to the brink of collapse. The public and the Congress are rightly outraged by this behavior.

■    AIG executives should voluntarily forgo their excessive retention payments, but if they refuse, Congress and the Administration will use every tool available to make AIG repay taxpayers. 
 
■    This week, Congress held hearings demanding answers from AIG on steps the company is taking to repay taxpayers.  Next week, there will be congressional action to prohibit the abuse of retention bonuses by companies receiving capital infusions from Treasury.  The Judiciary Committee has reported a bill to authorize the Attorney General to recover excessive compensation from these companies.
 
■    The AIG situation underscores the urgency and the need for overall financial regulatory reform so we don’t find ourselves in this position again.  Congress and the Administration are working together to that end.

■    The bill would impose a new 90 percent income tax on bonuses received by individuals from companies which have received over $5 billion from TARP. It would also apply to bonuses paid by Fannie Mae and Freddie Mac.

■    This tax would apply to retention payments, incentive payments, or other bonuses from these companies received after December 31, 2008.

■    The tax only would apply to bonuses received by taxpayers with adjusted gross incomes over $250,000.

■    It would cover companies receiving more than three-fourths of financial rescue funds already distributed.