As the financial reform debate formally begins in the Senate, the amendments have begun to pour in. Many are sure to be controversial. One such amendment: an excise tax on banker bonuses for 2009. Offered by Senator Jim Webb (D-VA), it would impose a 50% tax on what it defines an "excessive" incentive compensation award.
Such measures have become popular in Europe, with Britain and France adopting similar taxes. Perhaps the most interesting part about U.S. version is how it defines "excessive":
For purposes of this section, the term `covered excessive 2009 bonus' means any 2009 bonus payment paid during any calendar year to a covered employee by any major Federal emergency economic assistance recipient, to the extent that the aggregate of such 2009 bonus payments (without regard to the date on which such payments are paid) with respect to such employee exceeds the dollar amount of the compensation received by the President under section 102 of title 3, United States Code, for calendar year 2009.
The emphasis is mine, to highlight the key point. Webb wants a banker from a bailout firm to be taxed if his or her bonus exceeds Barack Obama's salary. According to the U.S. Code, that's $400,000.
Of course, Webb could have just said $400,000. So why did he instead choose to say the "compensation received by the President"? No doubt to make a political point. He and many of his colleagues in Congress likely believe that any given Wall Street banker doesn't deserve to receive a 2009 bonus larger than Obama's total salary. Webb wants to make clear that he didn't just pick $400,000 arbitrarily: he used the salary of his chief executive as a guide.
Yet presenting it this way does seem a tad paternalistic. Whether bankers deserve to be taxed on their 2009 bonuses or not is a matter of opinion. But using the President's pay as a guide to define "excessive" compensation will hardly comfort those bothered by a bonus tax's socialist undertones.
Opponents of the tax probably don't really have to worry, however. It's likely far too controversial to actually pass. In this case, it would likely require seizing some earnings already taxed in 2009, as some bonuses are paid to hit the same year's tax obligation. Still, Obama must feel honored to have Webb use his salary as the measure for what should be considered reasonable pay.