Sen. Sherrod Brown, D-Ohio, has introduced a bill that would tax more Wall Street bonuses than similar legislation introduced a week ago.
Browns bill would impose a 50 percent tax on all bonuses both cash and stock pay-outs in excess of $25,000 given to executives at firms that received taxpayer-funded assistance through the Emergency Economic Stabilization Act of 2008. The revenues would be used to fund direct loans for small businesses administered by the Small Business Administration.
Legislation proposed by Sen. Barbara Boxer, D-Calif., and Jim Webb, D-Va., would impose a 50 percent tax on bonuses of more than $400,000 in 2009 for employees at Wall Street banks and other firms that received more than $5 billion from the Troubled Asset Relief Program in 2009 (see Senators Propose Tax on Wall Street Bonuses).
Browns proposal is closer to legislation introduced in the House last month by Rep. Peter Welch, D-Vt., which would impose a 50 percent tax on bonus compensation above $50,000 for employees at firms that have received assistance through the TARP (see Lawmakers Call for Wall Street Bonus Tax).
In introducing the bill, Brown called attention to the continued public outrage over huge bonuses awarded at firms that received taxpayer funds.
Its time for Wall Street to return the favor to Main Street, he said in a statement. While big banks have rebounded thanks to the help of American taxpayers, small businesses are still struggling. If a big firm that received taxpayer help is now paying out massive bonuses, they should be able to help American small businesses expand operations and hire new workers. Small-business growth will create jobs and get our economy back on track.
Last week, he noted, insurance giant AIG which received $182 billion in government assistance paid out more than $100 million in bonuses to employees. Last year, when news of the companys bonus plans was unearthed, employees pledged to return $45 million in bonuses, but the company has recouped less than half of that pledged amount. Investment bank Goldman Sachs which received $10 billion from the TARP program and $12.9 billion in taxpayer aid through the AIG bailout reported last week that it would pay out $16 billion in bonuses.
Despite the assistance they have received from taxpayers, many banks receiving TARP funds have cut small-business lending, Brown noted. In November, the Treasury Department reported that the 22 largest financial institutions receiving taxpayer assistance reduced lending by $10.5 billion over the previous six-month period. The same banks reduced small-business loans by another $1 billion according to a new report released in December. Brown has also introduced the Small Business Emergency Loan Relief Act, which would temporarily raise the maximum loan amounts for SBA loan products and waive certain fees.
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