Reid, Berkley consider steep tax for AIG bonuses

By Lisa Mascaro

Tuesday, March 17, 2009 | 1:05 p.m.

WASHINGTON -- As outrage continues to build over taxpayer funds being used for employee bonuses at AIG, Nevada's lawmakers in Congress are considering legislation to impose severe taxes – more than 90 percent – on the pay-outs.

Majority Leader Harry Reid said the Senate will have a bill drafted within 24 hours to tax the bonuses at the very high rate if the insurance giant doesn’t take immediate steps to renegotiate the contracts.

In the House, Democratic Rep. Shelley Berkley signed on today as a co-sponsor of a bill that would similarly tax the AIG bonuses.

“AIG's attitude represents everything that's wrong with Wall Street,” Reid said. “Greed and perhaps even corruption.”

The Obama administration’s Treasury Department is coming under fire from Republicans for not having ensured bonuses would be banned before the company was given $30 billion, its most recent installment of federal bailout funds.

Republican Sen. John Ensign said he was not sure if taxing the bonuses was the right course of action, but said Congress should intervene.

“I don’t know the exact mechanism,” Ensign said. “I think the American people would say yea, first of all, it shouldn’t have been done in the first place.”