Effort to tax hefty bonuses losing Senate momentum

By Drew FitzGerald Boston University Washington News Service, Special to the BDN
Posted March 27, 2009, at 12:04 p.m.

WASHINGTON – A week after the House rushed to pass legislation that would impose heavy taxes on bonuses paid to AIG executives, Senate leaders signaled Thursday that they could take two weeks or more before they address the issue.

And on Thursday, the House Financial Services Committee adopted a milder alternative to last week’s bill that would let bailed-out companies pay bonuses as long as the government determines the compensation is not “unreasonable or excessive.”

Just what is unreasonable or excessive would be determined by financial regulators and the Treasury Department, where Secretary Timothy Geithner set off a public furor by not blocking $165 million in AIG payments to its financial products executives and traders on March 15.

The Senate, meanwhile, has put on hold a bill that Democrats unsuccessfully tried to advance last week. It would tax about 70 percent of the employee bonuses at AIG and other companies getting more than $100 million in bailout money.

The House bill passed last week would impose a 90 percent tax on executive bonuses paid by corporations that received more than $5 billion in bailout money.

But Senate Majority Leader Harry Reid, D-Nev., said senators might not debate the House bill or a more moderate version from the Senate Finance Committee until late April.

Sen. Olympia Snowe, R-Maine, an original sponsor of legislation that would tax executive bonuses, said the Obama administration was responsible for the delay.

“The resistance for this legislation emanates from the administration – no question,” Snowe said in an interview. “By all admissions and all accounts that was the case.”

One effort Snowe proposed with Sen. Ron Wyden, D-Ore., in February would have taxed all large bonuses bailout recipients paid their executives in 2008 at an extra 35 percent.

The Snowe-Wyden amendment passed the Senate on a voice vote with little public opposition but faltered after Democrats hammered out the final version of the bill in conference committee. When Congress passed the final bill that arrived on President Obama’s desk, the provision had been completely stripped.

“That had to come from the administration,” Snowe said. “There’s no question about that.”

Sen. Susan Collins, R-Maine, expressed concerns over the Senate bonus taxes during an appearance on “This Week with George Stephanopoulos” Sunday.

“We need to be careful,” Collins said according to a transcript of the program. “The problem with the Senate bill is it is so wide in its scope that it would apply to tens of thousands of employees all across this country who had nothing to do with getting us in this mess.”

http://bangordailynews.com/2009/03/27/news/effort-to-tax-hefty-bonuses-losing-senate-momentum/ printed on September 21, 2014