Sen. Schumer threatens huge tax on AIG bonuses

WASHINGTON (Reuters) - A senior U.S. senator on Tuesday warned American International Group Inc. employees to return bonuses they are receiving or face being slapped with a major tax on those payments.

"They should voluntarily return them (the bonuses). If they don't we plan to tax virtually all of it," Senator Charles Schumer, a member of the Democratic leadership, said in a speech on the Senate floor.

Schumer noted that AIG lost nearly $100 billion last year and is now being propped up by U.S. taxpayer funds. Providing performance bonuses to employees "Defines Alice in wonderland business practices ... it boggles the mind."

(Reporting by Richard Cowan)