Rangel: AIG Donation Seeker Turned AIG Bonus Tax Sponsor
Rep. Charles Rangel introduced the bill that would tax 90% of employee bonuses given by firms that received bailout money and excoriated the companies, "These people are getting away with murder. They’re getting paid for the destruction they’ve caused to our communities." Yet the NY Times finds that Rangel's relationship with Wall Street bullseye target-of-the-week A.I.G. is "complicated": "As recently as last year, he was trying to woo the company to donate $10 million to a school to be named in his honor. And while A.I.G. officials mulled the request, Mr. Rangel supported a provision in a tax bill that saved the company millions of dollars."
While AIG did not donate the $10 million, the Times notes that Maurice Greenberg, former AIG head and "until recently one of the company’s biggest shareholders," had held fundraisers for his friend Rangel and, through his foundation, donated $5 million to the school named after Rangel at City College. This is not the first time the NY Times has brought up donations to Rangel's school that seem to be timed with tax breaks. Another interesting fact: Earlier in the week, Rangel had opposed taxing bonuses from AIG and like bailout businesses.
The bill faces opposition from the GOP in the Senate—Sen. Judd Gregg (R-NH) said the tax code to "exact retribution" was "step into a world more akin to the government of Venezuela than that of America"—and the Senate has introduced its own bonus bill, which a Wall Street Journal tax expert called "hair-raising" and even "more draconian" than the House's version. Per the WSJ and its tax expert, "The Senate speaks of the 'excessive bonus.' The Senate bill would impose on both the employer and employee a 35% tax on any excessive bonus, which the Senate defines as 'a bonus paid to a covered individual which is a retention bonus' or the portion of any bonus over $50,000. It is what is called an 'excise' tax, so it’s in addition to the income tax. For many people on Wall Street, this means that they will bring home only 14% of their expected yearly pay."
