House Passes 90% Tax on Bonuses; Senate Action Delayed

House lawmakers overwhelmingly approved a measure to tax millions of dollars in bonuses paid to employees of American Insurance Group (AIG), the troubled insurance firm that received $170 billion in federal bailout money under the Troubled Asset Relief Program (TARP). The House voted on March 19, 2009, to approve HR 1586 by a vote of 328 to 93. The legislation would impose a 90-percent tax on the bonuses of highly paid individuals who work for firms that received more than $5 billion in TARP funds.

A companion measure was introduced into the Senate on March 19, 2009. The Compensation Fairness Bill of 2009 (S 651) would impose a 35-percent excise tax on both employers and employees on retention and other bonuses. The proposal would also put a cap on the amount of income employees of these companies are allowed to defer tax free. Small banks as defined by the tax code and entities that received less than $100 million in TARP funds would be exempt from the legislation. However, in the face of growing concern over the constitutionality of the measure and republican opposition, Senate Majority Leader Harry Reid, D-Nev., backed off efforts to bring the measure to the Senate floor the week of March 23, 2009.

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting