I 

111TH CONGRESS 

2D SESSION H. R. 4414 

To amend the Internal Revenue Code of 1986 to impose a 75 percent 

tax on bonuses paid by certain financial and other businesses. 

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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Responsible Banking 

5 Act of 2010’’. 

6 SEC. 2. FINDINGS. 

7 The Congress hereby finds: 


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1 (1) Excessive use of financial leverage contrib2 uted to the ongoing U.S. financial and economic cri3 sis. 

4 (2) The largest U.S. banks remain severely 

5 undercapitalized. 

6 (3) U.S. banks have failed to recognize losses 

7 from imprudent investments, particularly in assets 

8 linked to home mortgages and commercial real es9 tate, and the resulting economic uncertainty and 

10 household indebtedness are major impediments to 

11 U.S. economic recovery. 

12 (4) Multiple large public subsidies have been ex13 tended to the financial services industry in the form 

14 of cost-free access to capital, low-cost Federal loans 

15 and guarantees, Federal purchases of troubled as16 sets, and other exceptional actions taken and policies 

17 put in place since January 2008. 

18 (5) These public subsidies represent an extraor19 dinary benefit to all industry participants in the fi20 nancial marketplace, regardless of whether they have 

21 received direct Federal assistance. 

22 (6) A short-term focus on compensation has en23 couraged banking decision-makers to underestimate 

24 business risks, has undermined effective corporate 


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1 risk management, and has thereby contributed to ex2 cessive systemic risk. 

3 (7) Existing regulatory rules and institutions 

4 have proven inadequate to protect the American peo5 ple from ineffective and imprudent risk manage6 ment. 

7 (8) The flow of credit to small and medium8 sized businesses and to households continues to con9 tract, impeding overall economic recovery. 

10 (9) Enhanced capital adequacy is urgently 

11 needed to restore the health of the U.S. banking sys12 tem. 

13 (10) The use of profits to pay bonuses rather 

14 than recapitalize financial institutions delays recov15 ery of financial institutions and impedes recovery in 

16 the real economy. 

17 SEC. 3. TAX ON BONUSES PAID BY CERTAIN FINANCIAL 

18 AND OTHER BUSINESSES. 

19 (a) IN GENERAL.—Subtitle D of the Internal Rev20 enue Code of 1986 is amended by adding at the end the 

21 following new chapter: 

22 ‘‘CHAPTER 48—TAX ON BONUSES PAID BY 

23 CERTAIN FINANCIAL AND OTHER 

24 BUSINESSES 

‘‘Sec. 5000A. Bonuses paid by certain businesses. 


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1 ‘‘SEC. 5000A. BONUSES PAID BY CERTAIN BUSINESSES. 

2 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

3 a tax equal to 75 percent of any bonus paid for services 

4 performed in any specified business. 

5 ‘‘(b) LIABILITY FOR TAX.—The tax imposed by sub6 section (a) shall be paid by the person paying the bonus. 

7 ‘‘(c) SPECIFIED BUSINESS.—For purposes of this 

8 section, the term ‘specified business’ means— 

9 ‘‘(1) the Federal National Mortgage Associa10 tion, 

11 ‘‘(2) the Federal Home Loan Mortgage Cor12 poration, 

13 ‘‘(3) any business as a financial institution, in14 surance company, hedge fund, financial adviser, or a 

15 broker or dealer in securities, and 

16 ‘‘(4) any lending or finance business. 

17 ‘‘(d) TERMINATION.—This section shall not apply to 

18 bonuses paid more than 5 years after the date of the en19 actment of this section.’’. 

20 (b) TAX NOT DEDUCTIBLE.—Paragraph (6) of sec21 tion 275(a) of such Code is amended by inserting ‘‘48,’’ 

22 after ‘‘46,’’. 

23 (c) CLERICAL AMENDMENT.—The table of chapters 

24 for subtitle D of such Code is amended by adding at the 

25 end the following new item: 


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‘‘CHAPTER 48. TAX ON BONUSES PAID BY CERTAIN FINANCIAL AND OTHER

BUSINESSES.’’. 

1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to bonuses paid after the date of 

3 the enactment of this Act. 

Æ 


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