WASHINGTON, DC – U.S. Senator Bob Casey (D-PA) today called on the U.S. Treasury Department to reexamine executive compensation packages given that American International Group (AIG) has avoided nearly $18 billion in taxes since 2008.
“I am deeply concerned that AIG executives have benefited materially as a result of these tax breaks,” said Senator Casey. “The Administration should investigate compensation practices at AIG and ensure that continued support of AIG focus on recouping the investments made by taxpayers, and not be used to provide extravagant pay to corporate executives.”
In a letter sent today to Treasury Secretary Timothy Geithner, Senator Casey called on the Administration to provide Congress and the public with information on how many companies and how much tax benefit has been extended to date and when the Treasury Department plans on ending this support at the expense of the taxpayer.
In 2008, AIG received $182 billion in taxpayer assistance to avoid collapse. While the insurance company has since made progress in repaying the loan, it has done so while receiving special tax treatment from the Treasury Department for four years. Under the Treasury Department’s program, AIG has avoided $17.7 billion in taxes since 2008.
The full text of Senator Casey’s letter to Secretary Geithner is below:
The Honorable Timothy F. Geithner
Secretary of the Treasury
Dear Mr. Secretary:
I am concerned by recent reports about the Treasury Department’s granting of tax benefits to American International Group (AIG). As you know, AIG’s risky investments played a significant role in the financial crisis, requiring the federal government to provide emergency support in excess of $100 billion. Given the government’s significant investment and continuing ownership of the company, I take Treasury’s decisions very seriously and therefore ask for you to provide some additional information about our ongoing involvement with the company.
It is my understanding that in addition to the significant capital investment made in AIG, Treasury continues to provide special tax treatment by allowing the company to carry over its net operating losses despite its failure and subsequent bankruptcy. These breaks have provided billions of dollars in tax benefits to AIG.
I am deeply concerned that executives at these companies benefit materially as a result of these tax breaks. As I have said in regards to compensation at Freddie Mac and Fannie Mae, I do not believe at a time when so many American families continue to struggle to make ends meet, companies that receive government support to continue operations, like AIG, should use the support of taxpayers to provide excessive compensation and bonuses to their executives. I urge you to closely examine the executive compensation practices at AIG; any continued support of AIG should focus on recouping the investments made by taxpayers, and not be used to provide extravagant pay to corporate executives.
Because Treasury has also granted this tax treatment to other companies in the wake of the crisis, it is critical that Treasury communicate more clearly with Congress and the public regarding any special tax treatment it provides. Specifically, I would like to know how many companies and how much tax benefit has been extended to date, and when does Treasury plan on terminating this support?
Thank you for your consideration of my views.
Robert P. Casey, Jr.
United States Senator