Boxer, Webb Introduce Legislation on Wall Street Bonuses

Washington, D.C. – U.S. Senators Barbara Boxer (D-CA) and Jim Webb (D-VA) today introduced the Taxpayer Fairness Act, legislation that would impose a tax on large bonuses paid by Wall Street banks and other firms that benefited from billions of dollars of taxpayer assistance in 2009.

Senator Boxer said, “To avert a financial collapse, taxpayers saved ‘too big to fail’ companies. 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. The Taxpayer Fairness Act levies a 50 percent taxpayer fairness fee on bonuses in excess of $400,000 paid by firms that took $5 billion or more in TARP funds.”

“This is not class warfare,” said Senator Webb. “This is not something that’s going to run the gamut of all executive compensation and bonuses. This is a one shot deal. This is a tax on excessive bonuses of TARP recipients that received more than $5 billion from the American taxpayer in 2009.”

“The Financial Times, a paper dedicated to the free market, editorialized in favor of this position at the end of last year,” continued Webb. “We believe this is a fair and reasonable approach. It offers equity and a level of fairness to the American taxpayers who bailed these companies out.”

The legislation would apply only to Wall Street banks and other firms that received more than $5 billion from the Troubled Asset Relief Program (TARP).

The bill 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, since this was a year when the very survival of these institutions depended on government support. The revenues generated would be used to reduce the deficit or to help the nation recover from the recession.

In 2008 and 2009, the financial sector received unprecedented aid from taxpayers. According to the nonpartisan Special Inspector General for the TARP (SIGTARP), in mid-2009 there were 50 separate federal programs offering up to $23 trillion in low-interest loans, asset guarantees or other assistance to the financial sector – including $700 billion in TARP funds.

News reports this week indicate that Wall Street firms that benefited from taxpayer support paid significant bonuses in 2009 – including $4.4 billion in bonuses at Bank of America’s investment banking unit and $100 million in bonuses at AIG.

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