Rell Vetoes Bill To Tax TARP Bonuses
By AMANDA FALCONE, The Hartford Courant, May 20, 2022 -- Gov. M. Jodi Rell on Wednesday vetoed legislation that would have taxed bonuses given to employees at banks that received federal bailout money under the Troubled Asset Relief Program, or TARP.
The 8.97 percent temporary tax would have applied to employees who received more than $1 million. The bill would have also suspended the business entity tax for two years for businesses with at least one employee and a net income of less than $50,000.
Democrats said that revenue from the tax on Troubled Asset Relief Program (TARP) bonuses would have made up for money lost by suspending the business entity tax. Suspending the entity tax would have helped 46,000 Connecticut businesses, they said.
The legislature's nonpartisan Office of Fiscal Analysis has said that taxing Troubled Asset Relief Program (TARP) bonuses would bring in a total of only $2.7 million to $4.8 million in fiscal years 2010-11 and 2011-12. It estimated that fewer than 100 employees in Connecticut will get qualifying bonuses in over the next two years.
Rell said in a prepared statement Wednesday that she agrees the TARP bonuses are inappropriate but the bill would have triggered an automatic deficit and a long, costly and potentially unwinnable legal battle.
"However well-intentioned, I cannot sign into law a bill that creates an instant budget deficit," Rell said. "And while — like many people — I am outraged that any business that took a federal bailout would be paying out big bonuses to its executives, the law does not permit us to target individuals with punitive taxes. Many legal experts have warned that this legislation would certainly be challenged as exactly that."
The bill, Senate Bill No. 1, was pushed heavily by Senate President Pro Tem Donald Williams Jr., D- Brooklyn, who said that he was disappointed.
"Small businesses account for the vast majority of new jobs in Connecticut and this initiative would have offered help where it is needed most," he said. "Our plan to compensate for the tax cut by implementing a temporary surcharge on large Wall Street bank bonuses was fair and legally sound. Unfortunately, Republicans have been determined to protect these Wall Street bonuses — their legal argument is simply a smoke screen."