House passes Wall Street bonus tax

WASHINGTON (CNN) -- The House of Representatives passed legislation Thursday to try to recoup bonuses paid to Wall Street executives with taxpayer money.

The measure passed, 328-93; with most Democrats supporting it while Republicans were sharply divided.

A two-thirds majority among all members voting was required for passage.

The measure would tax individuals on any bonuses received in 2009 from companies getting $5 billion or more in money from the Troubled Asset Relief Program, or TARP. Bonuses for people with incomes over $250,000 would be taxed at a 90% rate.

The House vote came one day after AIG (AIG, Fortune 500) chief executive Edward Liddy testified before Congress that he has asked employees of the bailed-out insurer who took home more than $100,000 in bonuses to return at least half.

Liddy said some AIG employees have decided on their own to return their entire bonuses to the company.

More than $165 million in bonuses was distributed to AIG's senior executives. The federal government rescued the company from financial ruin with more than $170 billion in taxpayer-funded assistance.

"A handful of people (are) receiving taxpayers' money for threatening the community in which we live and indeed our country and the financial structure of the world," House Ways and Means Chairman Charlie Rangel said during the floor debate on the bill.

"The whole idea that they should be rewarded millions of dollars is repugnant to everything that decent people believe in ... It is not our job to tell the private sector what to do. It is our job to say don't do it at taxpayers' expense."

House Minority Leader John Boehner, R-Ohio, dismissed the bill as a "political charade" designed to protect the Obama administration and the Democratic majority in Congress.

"This bill is nothing more than an attempt for everybody to cover their butt up here on Capitol Hill," Boehner argued earlier Thursday. "It's full of loopholes. A lot of these people who are getting these bonuses likely live in London and it's not clear how raising this tax is going to recover that money."

Boehner later questioned why the bill didn't seek to recover all of the bonus money.

"The bill before us attempts to recoup 90% of these bonuses," he said. "Why 90%? ... The administration has the ability to get it all back ... This is a bad bill with bad consequences. We didn't see the bill until last night (and) nobody understands the consequences of what we're about to do. How can we possibly vote yes on a bill like this?"

A similar proposal in the Senate - which has not yet taken up the House bill - would attempt to recoup bonuses by taxing both individuals and companies.

Rangel said Wednesday that House leaders decided against penalizing companies because they could simply ask for more taxpayer money.