Mike Thompson United States Congressman - First District of California
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House Passes Executive Bonus Legislation

March 19, 2009

WASHINGTON- Today the House of Representatives passed legislation that would impose a stiff penalty on bonuses given by companies such as AIG that received government rescue funds.  Congressman Mike Thompson (D-Napa Valley) joined a bipartisan group of members voting for H.R. 1586, which passed the House by a vote of 328-93.

“It’s a slap in the face to tax paying Americans when failing companies spend taxpayer dollars on outrageous bonuses,” said Congressman Thompson.  “By closing this loophole, we are fulfilling the promise made to taxpayers that their money wouldn’t be spent on executive bonuses.”

The legislation passed today by the House will tax bonuses from companies that received $5 billion or more in Troubled Asset Relief Program (TARP) funds.  The bill would impose a 90 percent tax on bonuses paid after December 31, 2008. The tax would also apply to bonuses paid by entities affiliated with these companies.

The bill would not affect anyone receiving a bonus with adjusted gross income below $250,000 or employees of companies that have received $5 billion or less in TARP funds.  This tax would not apply to any bonus that is returned to the company in the same taxable year that the bonus is paid.

“As much as I dislike using the tax code for this purpose, the bonus debacle was an exception I’m willing to make,” said Congressman Thompson.

The bill passed today by the House is very similar to legislation written by Congressman Thompson earlier this week.  On Tuesday, Congressman Thompson introduced H.R. 1572, the “Taxpayer Protection Act,” which would subject any entity that received assistance under the Emergency Economic Stabilization Act of 2008 to a bonus tax rate of 90 percent.  Senate leaders have indicated that they will introduce and pass legislation to address this issue soon.

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