(1) Excessive use of financial leverage contrib-
uted to the ongoing U.S. financial and economic cri-
sis. 
(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 es-
tate, and the resulting economic uncertainty and 
household indebtedness are major impediments to 
U.S. economic recovery. 
(4) Multiple large public subsidies have been ex-
tended to the financial services industry in the form 
of cost-free access to capital, low-cost Federal loans 
and guarantees, Federal purchases of troubled as-
sets, and other exceptional actions taken and policies 
put in place since January 2008. 
(5) These public subsidies represent an extraor-
dinary benefit to all industry participants in the fi-
nancial marketplace, regardless of whether they have 
received direct Federal assistance. 
(6) A short-term focus on compensation has en-
couraged banking decision-makers to underestimate 
business risks, has undermined effective corporate 
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risk management, and has thereby contributed to ex-
cessive systemic risk. 
(7) Existing regulatory rules and institutions 
have proven inadequate to protect the American peo-
ple from ineffective and imprudent risk manage-
ment. 
(8) The flow of credit to small and medium- 
sized businesses and to households continues to con-
tract, impeding overall economic recovery. 
(9) Enhanced capital adequacy is urgently 
needed to restore the health of the U.S. banking sys-
tem. 
(10) The use of profits to pay bonuses rather 
than recapitalize financial institutions delays recov-
ery of financial institutions and impedes recovery in 
the real economy. 
SEC. 3. TAX ON BONUSES PAID BY CERTAIN FINANCIAL 
AND OTHER BUSINESSES. 
(a) IN GENERAL.—Subtitle D of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new chapter: 
‘‘CHAPTER 48—TAX ON BONUSES PAID BY 
CERTAIN 
FINANCIAL 
AND 
OTHER 
BUSINESSES 
‘‘Sec. 5000A. Bonuses paid by certain businesses. 
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‘‘SEC. 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 sub-
section (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 Associa-
tion, 
‘‘(2) the Federal Home Loan Mortgage Cor-
poration, 
‘‘(3) any business as a financial institution, in-
surance 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 en-
actment of this section.’’. 
(b) TAX NOT DEDUCTIBLE.—Paragraph (6) of sec-
tion 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: 
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‘‘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. 
Æ 
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