UPDATE: House Opens Debate On Bill To Tax Wall Street Bonuses
March 19 2009 - 1:28PM
Dow Jones News
The U.S. House of Representatives began debate Thursday on a
bill that would tax at 90% bonuses at Wall Street firms that
received federal bailout funds.
The House is expected to pass the bill later in the afternoon.
The Senate won't take up its own legislation on tax bonuses until
next week, according to Senate Finance Committee Chairman Max
Baucus, D-Mont.
"We're not trying to punish anybody," said House Ways and Means
Committee Chairman Charles Rangel, D-N.Y. "Rewards are subjective,
but you don't do it with taxpayers' money."
The House bill would affect bonuses paid by firms that received
more than $5 billion from the Troubled Asset Relief Program, plus
Fannie Mae (FNM) and Freddie Mac (FRE). The House bill is being
considered under special rules meant to expedite legislation, which
require a two-thirds vote of members present.
It comes as lawmakers continue to press insurance giant AIG
(AIG) for the names of employees who were paid $165 million in
bonuses last week.
The House rejected a Republican alternative that would have
directed the Treasury Secretary to develop a plan to recover the
AIG bonuses. In House floor debate Thursday, Republicans said
Congress shouldn't rush to judgment by passing the tax on
bonuses.
"I believe this is a gimmick. I don't think this is going to
become law," said Rep. Devin Nunes, R-Calif. "What we should do
today is calm down, stop this process ... and go through this bill
to consider whether this is the right course of action."
Republicans also said the legislation may be unconstitutional.
According to talking points distributed by House GOP conservatives,
the House bill might be a constitutionally prohibited "bill of
attainder," or legislation to punish a specific individual or group
of individuals.
Democrats say the bill is not specifically aimed at AIG but is
intended to prevent further abuses by bailout companies.
The lack of action this week by the Senate raises questions
about how quickly Congress will move ahead with legislation on the
bonuses.
The Senate bill is much broader than the House version - taxing
bonuses at any company that received federal assistance, not just
the largest ones. It would tax bonuses at 70%, split evenly between
the company paying the bonus and the employee receiving it.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244;
martin.vaughan@dowjones