This Wednesday, the Senate Finance Committee unanimously approved an annual $1 million limit on what executives can put into a tax-free deferred compensation plan. They also approved legislation to prohibit executives from protecting deferred compensation from creditors in the wake of a corporate bankruptcy. These are among about a dozen other provisions aimed at closing corporate and executive loopholes. Since many executives currently abuse deferred compensation plans to enrich themselves tax-free, the new law could raise taxes on corporations and executives by hundreds of millions of dollars in the next decade.

Recent scandals, ranging from Enron and WorldCom to the $210 million payout package for failed Home Depot alpha dog Bob Nardelli, contributed directly to the drafting and approval of this new legislation. Senate Finance Committee member Chuck Grassley says, "This is a matter of fairness. Executives shouldn't get to hide compensation from creditors while rank-and-file employees lose their shirts."

"Senate Committee Approves Limit on Executive Compensation Plans" from Law.com