As this week progressed, the likelihood of Congress imposing a 90-percent tax on huge bonuses for executives at companies receiving federal bailouts slipped farther and farther from reality.

House to vote on bill today

WASHINGTON – U.S. Rep. Bob Etheridge, the only N.C. member of the House Ways and Means Committee, introduced legislation last night to recover federal funds used for bonuses of top executives at financial firms receiving federal aid.  Etheridge is an original cosponsor of the legislation, sponsored by Ways and Means Chairman Charles Rangel.  The House will vote on the bill today.

“Traders on Wall Street should not be able to get rich at the expense of folks on Main Street who are struggling,” said Etheridge.  “Taxpayer funds should not be used to pay bonuses to the very individuals whose excessive risk-taking caused the financial crisis that has harmed thousands of North Carolina families.  When AIG has repaid taxpayers and is footing the bill, it is entitled to award compensation as it sees fit.  However, I cannot allow the company to use taxpayer dollars for its executives greed.”

H.R. 1586, the TARP Bonus Tax Bill, would tax the bonuses of highly paid individuals at a rate of 90 percent if their employer received more than $5 billion in federal assistance through the Troubled Asset Relief Program (TARP).  The legislation only applies to individuals whose total family income exceeds $250,000 per year (adjusted gross income).  It affects bonuses received after January 1, 2009.

The legislation follows American International Group’s decision to award more than $168 million in bonus payments to its top employees.  AIG has received more than $170 billion in emergency federal aid. The company claims that it is contractually bound to pay the bonuses because they were agreed to before Congress passed legislation to limit executive pay for firms receiving federal aid.

Etheridge sent a letter to Treasury Secretary Geithner on Tuesday expressing his outrage and disbelief at AIG’s plans to award the bonuses, asking him to “immediately intervene to suspend the payments.”