DEPOSIT Act Deliver Executive Profits On Seized Institutions to Taxpayers Act
Impact
If passed, SB800 will introduce a significant change in the taxation of executive compensation, particularly in the wake of a bank failure. The legislation would apply a higher tax rate on bonuses paid within a specific timeframe before a bank is placed under FDIC conservatorship and on profits from the sale of the bank's stock. This measure aims to recoup profits that executives earned during periods when their institutions may have been in distress, thereby addressing public concerns over the accountability of bank executives and the management of taxpayer funds during financial bailouts.
Summary
SB800, known as the 'Deliver Executive Profits On Seized Institutions to Taxpayers Act' (DEPOSIT Act), seeks to amend the Internal Revenue Code of 1986 to impose higher taxes on bonuses and profits obtained from stock sales by executives at failing banks. Specifically, this legislation targets those employed at insured depository institutions which have been closed and taken over by the Federal Deposit Insurance Corporation (FDIC). The bill expresses the intent that the revenue generated from this tax will be redirected to the Deposit Insurance Fund, a critical source for ensuring the stability of financial institutions in times of crisis.
Contention
The proposal has generated debate regarding its effectiveness and broader implications for banking regulations. Supporters of the bill argue that it is a necessary step to hold executives accountable for their financial decisions, especially during periods of bank instability that require federal intervention. Critics, however, may view the bill as potentially punitive and argue that it could discourage executive talent from entering or remaining in the banking sector. Furthermore, there are questions regarding the practical enforcement of the taxation provisions and whether they would indeed deter reckless behavior amongst bank executives.
Education: other; protections against harassment by an educational institution; provide for. Amends secs. 401 & 402 of 1976 PA 453 (MCL 37.2401 & 37.2402).