A bill passed by the U.S. House of Representatives to tax employee bonuses at companies getting $5 billion or more in government bailout funds could send bank employees rushing to the exit sign if it becomes law.
The largest banks in the United States would be affected by the legislation, approved on Thursday, which would add a 90% tax on bonuses for people earning more than $250,000.
The result of public and government outrage over $165 million in bonuses paid to employees of American International Group Inc's Financial Products unit, some sources said the legislation would have repercussions far beyond the insurer, which is getting up to $180 billion in public funds...(READ)
"It's terrible public policy with respect to trying to bring institutions back to health," said Robert Sedgwick, head of the executive compensation practice at law firm Morrison Cohen in New York.
"These institutions are under siege and their primary asset is their people," Sedgwick said, explaining that adding taxation to shrinking compensation for bankers will drive people from the business.