Tax News

CCH (cch.taxgroup.com) reports:

  Senate Majority Leader Harry Reid, D-Nev., has backed off on efforts to bring to the floor the Compensation Fairness Bill of 2009 (Sen 651), citing Republican recalcitrance and a need to review constitutional issues surrounding the legislation. Unofficially, flagging enthusiasm among lawmakers for recouping hefty bonuses paid to executives of American International Group (AIG), along with an apparent change of heart by President Obama, may have already killed the bill.

  Reid indicated late on March 23 that the Senate would continue its attempts to move the bill but there was less urgency in his voice compared to a week ago. "Republicans have asked for more time to study the legislation, and they're entitled to that. With Republican cooperation, we can quickly and responsibly return these funds to the American people," said Reid on the Senate floor.

  The author of the bill, Senate Finance Committee Chairman Max Baucus, D-Mont., told reporters following the weekly Democratic caucus luncheon on March 24 that the legislation is going through a "major reevaluation." Baucus said members are offering many different ideas and there is no consensus on how to proceed. When asked about the prospects of some form of a bonus bill eventually passing, Baucus acknowledged that momentum has weakened saying, "That's hard to answer right now."

  Without quick action however, the bill could languish as the Senate is slated to debate its 2010 budget during the week beginning March 30 and then to depart for a two-week spring recess beginning on April 3.

 
Sen 651 would impose a 35-percent excise tax on both employers and employees for bonuses given out in 2009. The measure would apply to most companies receiving federal funds under the Troubled Assets Relief Program (TARP). The proposal would also put a cap on the amount of income employees of these companies are allowed to defer tax-free. The House on March 19 passed companion legislation (HR 1586) that would impose a 90-percent tax on excessive bonuses paid to executives of companies that received more than $5 billion in federal TARP funds (TAXDAY, 2009/03/20, C.1).

  By Jeff Carlson, CCH News Staff