December 30, 2009
Buchanan: Tax Wall Street's Huge Bonuses
France and Britain have recently enacted new taxes on bankers' bonuses, taxes that will be paid in addition to the standard income taxes that the bankers pay in those countries.
the historically unparalleled -- and growing -- concentrations of income and wealth in the United States, and given that so much of that inequity is a result of our out-of-control financial sector, our leaders should quickly adopt a similar tax on financiers' bonuses here.
Proposals for a "bonus tax" in the United States have elicited the usual denunciations of taxes of any sort, but discussion among more sophisticated analysts has been mixed. Some opponents of the tax suggest -- and even some proponents seem to concede -- that a tax on bonuses might drive "the best and the brightest" from the field of finance. That will not happen.
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Proposals for _________ in the United States have elicited the usual denunciations of _______ of any sort, but discussion among more sophisticated analysts has been mixed.
At a sentence with this structure, my blood pressure spikes and my hand clutches my wallet. In particular, the phrase more sophisticated analysts activates my fight-or-flight response.
I have concerns about America's (dis)incentives, both on their merits and when I read about talented foreigners, recent graduates and established professionals, increasingly returning to their countries of origin. However, IMO econprof-turned-lawprof Buchanan, with his assumptions about what motivates high achievers in the private sector, does not provide a good starting point for a constructive discussion.
But he might be telling politicians exactly what they want to hear.
Afterthought: My understanding is that many of those fat bonuses were generated via Wall Street's exploitation of defective government policies. So isn't it only fair for Washington to take some of that money back? Somehow I doubt that our political class wants to pursue that line of argument...
Posted by: gs | Dec 30, 2009 6:48:20 PM
I think the Big Banks that bet too much on derivatives should ALL have been declared insolvent, gone quickly thru a bankruptcy which saw their equity wiped, their bonuses canceled, and their obligations getting new shares instead of cash.
I also favor special bonus taxes on financial bonuses. And, while most of the 'best & brightest' will stay in finance, tho perhaps more in non-financial companies, some will likely try some other ways of making money. No examples of which come to mind.
Posted by: Tom Grey | Dec 30, 2009 7:25:12 PM
How about a surtax on overpaid academics? Or at the very least, making colleges pay tax on their income from footbal bowl games, etc.? Those who live in glass houses shouldn't throw stones.
Posted by: mike livingston | Dec 30, 2009 10:46:11 PM
wow ! great article !lets hope the market gets back on track in 2010 ! :)
Posted by: vaibhav | Dec 31, 2009 3:45:49 AM
Every tax-paying American should take a look at http://www.TaxWallStreet.com which is a website that is dedicated to getting Congress to impose a windfall super-tax on Wall Street bonuses. TaxWallStreet.com has an open letter to Congress and a link to the write your representative page on the House of Representative's page. If enough Americans start sending letters to Congress then maybe they will hear the voice of reason.
Posted by: Dave Starson | Dec 31, 2009 4:27:02 PM