Senators Boxer, Webb Push to Add Bailout Bonus Tax to $150 Billion Bill Before Senate
Mar 4, 2010 at 5:41 PM
DailyBail in bank bonus, barbara boxer, bonus, jim webb, wall street, wall street

Pleasant news from earlier this afternoon.

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From The WSJ

WASHINGTON—Two Democratic senators were pushing for a vote Thursday on a measure that would levy a one-time tax on bonuses paid to executives at firms that received significant infusions of taxpayer cash during the economic crisis.

If Sens. Barbara Boxer (D., Calif.) and Jim Webb (D., Va.) are successful, it would bring the contentious issue of executive compensation back to the fore.

"It's a one-time amendment based on a unique situation in this country when the American taxpayers had to bail out our major companies in order to stabilize our economy," Mr. Webb said on the floor of the Senate Thursday.

The tax would be a one-off 50% levy on bonuses above $400,000 paid to executives at institutions that received $5 billion or more of taxpayer support.

It would apply to 11 institutions, all financial firms except for car maker General Motors Co., which has one of the largest outstanding debts to the Treasury. Housing guarantee agencies Fannie Mae and Freddie Mac would also be hit by the measure.

Only bonuses paid in 2010 related to performance in 2009 would be impacted.

Any money raised would be returned to the Treasury to be used to pay down the burgeoning federal budget deficit.

The lawmakers are trying to add it to a roughly $150 billion bill that would extend a series of tax credits aimed at businesses and individuals, provide continued federal support for jobless Americans, and increase federal transfers to state governments.

Last year, the House of Representatives passed a bill specifically targeting executives at American International Group Inc. with a bonus tax. But the Senate didn't take the measure up and Congress' attention moved on to other matters.

This time around if the Senate were to act first, it would only require the House to take it up in order for the bonus tax to become law. Populist outrage at what they perceive to be excessive compensation on Wall Street has tended to run much higher in the House since the crisis began.

—Damian Paletta of The Wall Street Journal contributed to this article.

Write to Corey Boles at corey.boles@dowjones.com

 

 

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