The US House of Representatives was quick to act on the AIG bonus issue by passing a bill that punishes companies that were bailed out by the federal government if they hand out big bonuses. Penalties can be as grave as a 100% tax on bonuses which effectively sends the bonus to the government leaving the recipient with nothing.
The bill imposes a 90% tax on bonuses to employees of companies that received at least $5 billion in bailaout money with family incomes above $250,000. House Ways and Means Committee chair Rep Charles Rangel said he expects local and state governments to take the remaining 10% to cancel out the bonuses.
The controversy was sparked by reports of insurance giant AIG handing out huge bonuses amounting to $165 million to its employees last year despite receiving billions in bailout money from the government. The Democrat-led house voted 328-93.
Source: Business Week
