The U.S House of Representatives has voted 328-93 to approve legislation that would impose a 90 percent tax on bonuses that go to highly paid employees at recipients of the Troubled Assets Relief Program (TARP).
The 90 percent tax would apply to TARP recipients' bonus payments to employees who have an adjusted gross income exceeding $250,000 ($125,000 in the case of a married individual filing a separate return).
The legislation (H.R.1586) would exempt any employee who irrevocably waives or returns a bonus payment before the close of the taxable year. The exemption wouldn't apply to any employee who receives any benefit from the employer in connection with the waiver or return of such payment.
The legislation would apply to TARP recipients who received more than $5 billion from the program. Companies that repay the amount that exceeds the $5 billion threshold would be exempt from the tax.
The legislation was approved in the House after news spread of the $165 million in retention bonuses AIG paid to employees in the unit that was primarily responsible for the company’s financial troubles.
The legislation now goes to the Senate.