Sen. Jim Webb, D-Va., spoke on the Senate floor today about his bill that would impose a one-time tax on certain bonuses paid under to executives of financial institutions that received federal bail-out money.

Here’s the full release from Webb’s office:

Senator Jim Webb (D-VA) today called on his colleagues to support the Webb-Boxer Taxpayer Fairness Act, H.R. 3342, currently pending as an amendment to the “tax extenders” bill. The measure puts a one-time windfall tax on 2009 bonuses above $400,000 paid to executives of financial institutions that received $5 billion or more in taxpayer support from the Troubled Assets Relief Program (TARP). It would raise billions of dollars toward reducing the deficit and offsetting the costs of pending legislation.

Senators Webb and Barbara Boxer (D-CA) first introduced the legislation as a free-standing bill, S.2994, on February 4, 2010.

“This is a carefully drafted, one-shot amendment to give American taxpayers an upside in the recovery of the financial system that they enabled,” said Senator Webb today on the Senate floor. “This is a one-time, 50 percent excise tax on bonuses in excess of $400,000 paid to individuals working for the institutions that received more than 5 billion dollars from the American taxpayer.”

“Let me stress: the American taxpayers did not create this economic crisis. They were required to bail out those who did create it. They deserve to share in the rewards that they enabled.”

Webb pointed to the bipartisan consensus on this issue—from the New York Times to the Financial Times.

“Paul Krugman of the New York Times wrote in July 2008 that we are socializing risk and individualizing the reward,” said Webb. “This is exactly what we’re seeing play out today. This particular reward, resulting in excessive bonuses of Wall Street financial institutions, has come about largely as a result of government intervention. As a matter of equity, the rewards should be shared with the taxpayers who made it possible.”

“Similarly, Martin Wolf—a market capitalist—editorialized in the Financial Times in November 2009 that a windfall profits tax in this unique situation is more than appropriate,” said Webb.

Webb referenced the earlier support of many colleagues for a similar, but broader bill—the Compensation Fairness Act of 2009, S.651—introduced by Senators Baucus, Menendez, Schumer, and Grassley in March 2009. He also quoted from New York Attorney General Andrew Cuomo’s letter to New York financial institutions: “…when you receive TARP funding, you take on a clear responsibility to the American taxpayers.”

Webb said that the vote November 2007 vote on TARP funding was a difficult and defining moment in the Senate: “Those of us who supported the legislation did so with the explicit understanding that it was the American taxpayers who were putting the money in and who, when the system righted itself, would get a return on their investment.”

Concluded Webb: “Working people strongly and rightly believe that they have borne the brunt of this economic crisis, and they are the last to be rewarded as we begin to recover from it. It’s not too much to ask that those who have been fully compensated, and who have received in excess of a $400,000 bonus, pay a one-time tax on that excess in order to help make their rescuers a little more secure.”

A summary of the legislation follows.

WEBB-BOXER “TAXPAYER FAIRNESS ACT,” S.2994

SUMMARY

The Taxpayer Fairness Act, S.2994, introduced by Senators Jim Webb (D-VA) and Barbara Boxer (D-CA) on February 4, 2010, will impose a one-time 50 percent tax on excessive bonuses paid by Wall Street banks and other firms that benefited from billions of taxpayer dollars in 2009. The revenues generated would be used for deficit reduction.

KEY PROVISIONS

· This legislation imposes a one-time 50 percent tax on bonuses above $400,000 paid to executives of financial institutions that received $5 billion or more of taxpayer support under the Troubled Assets Relief Program (TARP) or the Housing and Economic Recovery Act 2008, 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. Stock options and grants of stock are included as bonuses.

· This proposal affects only bonuses given in 2010 for performance in 2009, and no other year. 2009 was an extraordinary year when the success and, in many cases, the survival of these companies depended on federal assistance.

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

APPLICABLE INSTITUTIONS

The top seven recipients of TARP funds paid out over $31 billion in employee bonuses for performance in 2008, with 4,675 employees receiving bonuses of $1 million or greater. Bonuses for 2009 performance will be even larger: compensation at these seven firms has increased by $14 billion this year.

The Taxpayer Fairness Act would apply to executives at the following financial institutions that received $5 billion or more of taxpayer support:

· AIG $45.3 billion

· Bank of America $45 billion

· Citigroup $45 billion

· Fannie Mae $59.9 billion

· Freddie Mac $50.7 billion

· General Motors $50.7 billion

· GMAC $16.3 billion

· Goldman Sachs $10 billion

· JP Morgan $25 billion

· Morgan Stanley $10 billion

· PNC Financial $7.6 billion

· Wells Fargo $25 billion

· US Bancorp $6.6 billion

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