A note to the British: you should thank your lucky stars that the Republicans are not running the Congress because fish and chips would now be renamed Freemarket Delight to protest your government’s decision to levy a tax on bankers’ bonuses. Seriously, here is one small step forward to a rationale response to the obscene bonuses still being collected by some of the very people who helped manufacture the financial crisis.
This just in:
In a widely expected move, Britain’s chancellor of the Exchequer, Alistair Darling, will announce Wednesday a one-time tax on bank bonuses, according to a person who was briefed on his speech.
In an address before parliament, Mr. Darling will also outline steps to tackle Britain’s soaring budget deficit, which at 13 percent of gross domestic product is among Europe’s highest. But it will be his proposed levy — which will immediately become law and will affect banks’ 2009 profits — that will draw the most attention.
The tax represents the most direct attack on bank bonuses anywhere in the world. All banks in Britain — including the London-based subsidiaries of foreign banks — will be affected, whether they took government bailout funds or not.
The British government has paid out £1 trillion, or $1.63 trillion, in support of its hobbled banking sector, a sum that underscores the financial sector’s large contribution to the overall economy.
I am all for trying to cap and restrict pay for the banks and financial institutions that are feeding off our public money. But, I’ve always been skeptical about making sure that we can monitor in an effective way how the compensation, particularly bonuses, gets shifted around with various new tricks.
But, by simply taxing it at the back end, you at least have some ability to require that the highest earners start paying their fair share in dues to a society that gives them such a rich bounty.
I hope to see a similar measure introduced into the U.S. Congress. In the meantime, a tip of the hat to Mr. Darling
