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Senators propose 50% tax on bonuses at bailed-out firms


WASHINGTON (Reuters) - Two Democratic senators yesterday proposed legislation that would impose a one-time tax on bonuses paid to executives of companies bailed out with taxpayer money.

Senators Barbara Boxer and Jim Webb proposed a 50 percent tax on 2009 bonuses above $400,000 at any firm that has received more than $5 billion in government assistance.

The senators said they had not yet gathered broad support for the proposal, and neither sits on the tax-writing Senate Finance Committee, which would likely have to take up the bill.

A 35 percent tax on bonuses at bailed-out companies was proposed last year by the leaders of the Finance Committee, Democrat Max Baucus and Republican Charles Grassley, but it has not been acted on.

The Boxer-Webb proposal comes amid rising anger in the United States and abroad over lavish bonuses paid to executives at large financial firms so soon after governments had to use taxpayer money to rescue the financial system from collapse.

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Senators Propose Tax on Wall Street Bonuses

Sen. Barbara Boxer, D-Calif., and Jim Webb, D-Va., have introduced legislation that would impose a tax on large bonuses paid by Wall Street banks and other firms that received more than $5 billion from the Troubled Asset Relief Program in 2009.

The Taxpayer Fairness Act would impose a 50 percent excise tax on the bonuses of employees at these firms that exceeded $400,000 in 2009. Any employee who received a bonus larger than $400,000 — the salary of the president of the United States — would have to pay a 50 percent tax on the portion of the bonus over $400,000. Only bonuses received in 2009 would be affected. The revenues generated would be used to reduce the deficit or to help the nation recover from the recession.

“To avert a financial collapse, taxpayers saved ‘too big to fail’ companies,” said Boxer in a statement. “It is outrageous that these companies are now doling out millions of dollars in bonuses while the rest of America feels the pain of their reckless decisions.”

Last month, Rep. Peter Welch, D-Vt., introduced a similar bill, the Wall Street Bonus Tax Act, co-sponsored by 23 other lawmakers in the House (see Lawmakers Call for Wall Street Bonus Tax). That bill would tax bonuses at firms that have received assistance through the TARP at a rate of 50 percent for all bonus compensation in excess of $50,000. Revenues generated by the House version of the tax legislation would fund a new direct lending program administered by the Small Business Administration.

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Well, they would have had no bonuses without the bail out money being shelled at risk to taxpayers.

Let's hope that bill passes and the money goes direct to deficit reduction!

-- Edited by Sanders on Friday 5th of February 2010 04:54:11 PM