Willis bill takes on TARP bonuses

State Rep. Roberta Willis (D-64) is taking aim at executives who received excessive bonuses, paid for with taxpayer money.

Her proposed bill, “An Act Imposing a Tax on Bonuses Received by Employees of Businesses That Received Funds Under the Troubled Asset Relief Program� (HB 5175), would require executives at bailed-out companies to pay back a majority of their bonuses in taxes to the state.

“My feeling is this: It’s about fairness,� Willis said. “This is taxpayer dollars that rightfully belong to the taxpayers.�

The bill applies only to businesses that received money from the federal Troubled Asset Relief Program (TARP) and only to bonuses paid out with that money. An executive who receives such a bonus would be able to keep the first $100,000 (or $250,000 for a couple filing jointly) and then would pay the state 90 percent of the balance in taxes.

“We’re playing hardball, too,� Willis said.

The companies affected have argued that they were required to pay the bonuses because of contracts that existed before the bailout money came in. Willis said she feels the bailout money was not intended to be used to pay bonuses.

“Federal tax dollars were used to help them keep their jobs and prevent the loss of further jobs,� she said. “It was not intended to pay bonuses for executives.�

Willis said she decided to cosponsor this bill because she has heard a lot of dissatisfaction from her constituents.

“I think that’s where people’s frustration is: They just don’t see the fairness,� she said. “I think [other legislators] would generally be supportive. They have to be hearing the same things in their districts I’m hearing in mine.�

Willis stressed that the employee’s regular salary would not be affected by this bill, nor would any future bonuses. Only bonuses paid with TARP money would be taxed. Also, the tax only affects executives who live in Connecticut.

“The point is, this isn’t corporation money,� she said. “These are companies that got bailed out with tax dollars. It’s not company profits we’re talking about here. If you help the company make money, great, but that’s not what we’re talking about here.�

State Rep. John Rigby (R-63) said that he had a few concerns about the proposed bill. The first was whether it is legal to target a specific group the way this bill does. He said research is being done now to ensure that the bill is legal before it goes forward.

“One concern I have is the bill doesn’t specify which companies or which types of companies,� he said. “Does this apply to someone who works for GM? I think a lot more research needs to be done.�

The bill has been filed and is scheduled to be reviewed by the Legislature’s Finance, Revenue and Bonding Committee. If the bill passes the committee, there will be a public hearing and later a vote in the state House of Representatives.