It was only a matter of time before some bright Congressman decided that the UK decision to tax 2009 banker bonuses over $48,000 by 50% was a good way to raise money for the Treasury. Bankers, particularly those that got TARP funds, are easy for the government to demonize. The taxpayers saved them. A year after the bailout, the financiers whose jobs were secured by the sweat of the average citizen are collecting compensation in the hundreds of thousands, and, sometimes, millions of dollars.
Democratic Senators Barbara Boxer and “Sunny” Jim Webb have proposed taxing banker bonuses of over $400,000 by 50% on the money firms paid out for 2009. The tax would only apply to companies that got TARP funds in excess of $5 billion. It is worth remembering that some banks say they did not want the cash. Henry Paulson forced them to take it so that some firms did not look much stronger financially than others. Paulson feared a run on banks that the public perceived as being in trouble.
Banks are already facing fees that the government may set to pay back the TARP money in total. This tax would probably be based on balance sheet liabilities. But, if the banks are to be punished, why not tax them twice?
Douglas A. McIntyre
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