House Democrats announced this afternoon that they'll hold a vote Thursday on a new tax designed to recoup the $165 million in bonuses recently paid out by AIG. The legislation would impose a 90 percent tax on bonuses given to employees who earn more than $250,000 a year, but would apply only to companies that have received at least $5 billion in federal money.
In a significant development, Rep. Charlie Rangel, D-N.Y., who chairs the House Ways and Means Committee, has apparently changed his mind about the idea. On Tuesday, he told reporters, "It's difficult for me to think of the code as a political weapon." Now, however, he's backing the plan.
Still, passage is by no means assured. House leaders plan to bring the bill up for a vote under a suspension of the rules, a procedure that limits floor debate and prevents amendments from being added to it but means that a two-thirds vote is required to pass the legislation. Democrats have a substantial majority in the House, but it's not that big, and even if they can hold all of their members, they'll have to convince 36 Republicans to side with them. Just this month, the party got a little too cocky in calling for a suspension of the rules and watched one bill go down to defeat as a result.
Moreover, as I noted in an earlier post, if the tax does pass and is signed into law by President Obama, there's still the question of how many bonus recipients it will actually apply to. The division of AIG that's at the center of its troubles was headquartered in London, and there were, presumably, some people working there who were not U.S. citizens. In that case, they wouldn't be subject to the tax.