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.

Barbara Boxer

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.