Sen. Jim Webb, D-Va., announced today that he will introduce legislation calling for a “windfall” tax on executives of financial institutions that received $5 billion or more of taxpayer support under the financial bail-out.

The full text of Webb’s release is below. What do you think? You can leave comments below or send a letter to the editor of The Blue Ridge Business Journal at news@bizjournal.com.

This week, Senator Jim Webb informed Majority Leader Reid and Senate leadership that he intends to work with Senator Barbara Boxer to offer the Taxpayer Fairness Act, S. 2994, as an amendment to the jobs bill or the next appropriate legislative vehicle.

Last week, Senators Webb and Boxer introduced S. 2994 to put a one-time windfall tax on 2009 bonuses paid to executives of financial institutions that received $5 billion or more of taxpayer support under TARP. This timely measure would raise billions of dollars toward reducing the deficit and offsetting the costs of necessary job creation legislation. It is a targeted, sensible, carefully-crafted approach that will ensure that the taxpayers who made possible the success of the biggest financial institutions benefit from that success—not just the executives of those institutions.

Said Senator Webb: “Our nation’s financial system was saved by taxpayers—the nurses who care for us, the truck drivers who deliver our goods, and the soldiers protecting us overseas. It is reasonable to ask those who are benefiting on Wall Street to help pay back the taxpayers whose investment made the success of these institutions possible. Our bill is focused and equitable. This is not class warfare. It will place a one-time, 50 percent excise tax on excessive bonuses paid to individuals working for the institutions that received more than 5 billion dollars from the American taxpayer in 2009.”

“The Financial Times, a paper dedicated to the free market, editorialized in favor of this position at the end of last year,” continued Webb. “We believe this is a fair and reasonable approach. It offers equity and a level of fairness to the American taxpayers who bailed these companies out.”

To read the full text of the Boxer-Webb “Taxpayer Fairness Act,” visit: http://www.scribd.com/doc/26377327/Taxpayer-Fairness-Act

To view relevant charts, visit: http://www.scribd.com/full/26379670?access_key=key-q4rq52731ad5l43g9b5

To read the Financial Times editorial referenced by Senator Webb, visit: http://webb.senate.gov/newsroom/newsarticles/11-19-2009-02.cfm

A summary of the legislation follows.

Description of The Taxpayer Fairness Act

· This legislation imposes a 50 percent excise tax on all bonus payments from major recipients of Federal economic assistance that exceed the President’s annual cash salary of $400,000.

· For example, out of a one million dollar bonus:

o $400,000 of the bonus would be exempt from the special fee.

o $600,000 of the bonus would be subject to a 50 percent fee.

o the excise tax would thus total $300,000 on a million dollar bonus.

· The legislation affects all 2009 bonus payments from major recipients of Federal emergency economic assistance.

· “Major recipients” are defined as companies receiving $5 billion or more from the Troubled Asset Relief Program (TARP), including the two largest housing agencies (Fannie Mae and Freddie Mac).

· Base salary and sales commissions are not defined as bonuses and thus not affected.

· However, stock options and grants of stock are included as bonuses.

· This proposal affects only bonuses given for 2009, and no other year. This is an extraordinary year when the success and in many cases the survival of these companies depended on Federal assistance.

· The excise tax is imposed on individual recipients of bonuses from these companies, not the company itself.

· Revenues raised would be returned to the Treasury to be used for deficit reduction.