(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) signed on as a co-sponsor of S. 2994, the “Taxpayer Fairness Act,” which would impose a fifty percent tax on excessive bonuses paid by Wall Street banks and other firms that benefited from billions of taxpayer dollars in 2009.
“I’m sick and tired of taxpayers being forced to reach into their pockets to save Wall Street only to watch big banks and CEOs return to a ‘Bonus As Usual’ mentality,” said Senator Patty Murray. “This bill will force Wall Street executives to pay back the taxpayers who never intended for their hard-earned money to be used to pay for huge bonuses for the very people who got our economy into this mess.”
The legislation would apply only to Wall Street institutions that received more than $5 billion from the Troubled Asset Relief Program (TARP) and the Housing and Economic Recovery Act.
The bill would impose a 50% excise tax on the bonuses of employees at these firms that exceed $400,000. 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.
This is a one-time tax, affecting only bonuses received this year that are based on performance in 2009—a year when these institutions were heavily dependent on government support. In some cases, the federal resources provided ultimately helped prevent their failure. The revenues generated by the tax would be used for deficit reduction.
In 2008 and 2009, the financial sector received unprecedented aid from taxpayers. In addition to the $700 billion TARP, there were 50 separate Federal programs offering $23 trillion in loans, grants, or asset guarantees to the financial sector, according to the nonpartisan Special Inspector General for the TARP (SIGTARP.)
News reports this week indicate that Wall Street firms that benefited from taxpayer support plan to pay significant bonuses this year– including $4.4 billion in bonuses at Bank of America’s investment banking unit and $100 million in bonuses at AIG.