Four of Iowa’s five congressmen voted in favor of a measure in the U.S. House Thursday that would heavily tax employee bonuses at companies that receive more than $5 billion in government bailouts. Democrat Bruce Braley says the bill would only apply to executives paid an annual salary of more than $250,000. Those executives would face a 90% tax rate on their bonuses. Braley says the tax would not apply to executives who voluntarily return their bonuses to the company.
The legislative action follows news that insurance giant AIG paid executives about $165 million in retention bonuses after receiving nearly $180 billion in government bailouts. Representative Steve King, a Republican from Kiron, was the only Iowan to vote against the measure which passed the House on a vote of 328-93.
Braley, who’s from Waterloo, says some are questioning if the legislation approved would survive court challenges. "We will probably be taking up another bill next week, out of the Judiciary Committee, to address (that)," Braley said.
AIG Chief Executive Edward Liddy defended the bonuses this week by saying the payouts were necessary to retain top employees with specialized knowledge. Liddy told Congress that some of the executives have returned their full bonuses.