I 111th CONGRESS 2d Session H. R. 4414 IN THE HOUSE OF REPRESENTATIVES January 12, 2010 Mr. Kucinich (for himself, Ms. Watson, Ms. Norton, Mr. Clay, Mr. Ellison, and Mr. Hare) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to impose a 75 percent tax on bonuses paid by certain financial and other businesses.

1.

Short title

This Act may be cited as the Responsible Banking Act of 2010.

2.

Findings

The Congress hereby finds: (1)Excessive use of financial leverage contributed to the ongoing U.S. financial and economic crisis. (2)The largest U.S. banks remain severely undercapitalized. (3)U.S. banks have failed to recognize losses from imprudent investments, particularly in assets linked to home mortgages and commercial real estate, and the resulting economic uncertainty and household indebtedness are major impediments to U.S. economic recovery. (4)Multiple large public subsidies have been extended to the financial services industry in the form of cost-free access to capital, low-cost Federal loans and guarantees, Federal purchases of troubled assets, and other exceptional actions taken and policies put in place since January 2008. (5)These public subsidies represent an extraordinary benefit to all industry participants in the financial marketplace, regardless of whether they have received direct Federal assistance. (6)A short-term focus on compensation has encouraged banking decision-makers to underestimate business risks, has undermined effective corporate risk management, and has thereby contributed to excessive systemic risk. (7)Existing regulatory rules and institutions have proven inadequate to protect the American people from ineffective and imprudent risk management. (8)The flow of credit to small and medium-sized businesses and to households continues to contract, impeding overall economic recovery. (9)Enhanced capital adequacy is urgently needed to restore the health of the U.S. banking system. (10)The use of profits to pay bonuses rather than recapitalize financial institutions delays recovery of financial institutions and impedes recovery in the real economy.

3.

Tax on bonuses paid by certain financial and other businesses

(a)

In general

Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: 48

Tax on bonuses paid by certain financial and other businesses

Sec. 5000A. Bonuses paid by certain businesses.

5000A.

Bonuses paid by certain businesses

(a)

Imposition of tax

There is hereby imposed a tax equal to 75 percent of any bonus paid for services performed in any specified business. (b)

Liability for tax

The tax imposed by subsection (a) shall be paid by the person paying the bonus. (c)

Specified business

For purposes of this section, the term specified business means— (1)the Federal National Mortgage Association, (2)the Federal Home Loan Mortgage Corporation, (3)any business as a financial institution, insurance company, hedge fund, financial adviser, or a broker or dealer in securities, and (4)any lending or finance business. (d)

Termination

This section shall not apply to bonuses paid more than 5 years after the date of the enactment of this section.

. (b)

Tax not deductible

Paragraph (6) of section 275(a) of such Code is amended by inserting 48, after 46,. (c)

Clerical amendment

The table of chapters for subtitle D of such Code is amended by adding at the end the following new item: Chapter 48. Tax on bonuses paid by certain financial and other businesses.. (d)

Effective date

The amendments made by this section shall apply to bonuses paid after the date of the enactment of this Act.