Bonus Tax Vetoed by Gov. Rell

A measure that would have taxed bonuses given to employees of financial institutions that received federal bailout money under the Troubled Asset Relief Program (TARP) has been vetoed by Gov. Rell.
The new tax, contained in SB-1, was designed to pay for a two-year suspension of the $250 business entity tax for businesses that have at least one employee and net incomes of less than $50,000.
The Governor said that although the TARP bonuses were inappropriate, “the law does not permit us to target individuals with punitive taxes.”
Fighting a likely challenge to the law, said the governor, would have resulted in a long and expensive court case—something the state cannot afford.
Fiscally, the tax would not have helped the state’s bottom line. According to projections by the state’s Office of Fiscal Analysis, the 8.97% tax on TARP bonuses could have brought in between $2.8 million and $4.7 million a year.
But its cost–a state revenue loss of $12 million a year from the business tax exemption—would have far outweighed its potential gain.
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.