NYT Editorial: tax fat cat bankers.
Before [Obama] gets over his anger, he might want to take a look at how the British found a way to realign the fat cats’ boundless greed with the public interest: slapping a hefty windfall tax on their bonuses. He still has time to push Congress to enact a similar levy here.
Bankers are likely to scream — threatening to leave the country and arguing that such narrow taxation is unconstitutional. The best in the accounting business will undoubtedly be tasked with coming up with strategies to avoid taxation, by pushing bonuses back in time or with other ruses. No one should be intimidated.
Threats to move overseas are empty. London is out of the picture. The French president, Nicolas Sarkozy, has said he would follow the British lead. Germany and other countries could be persuaded to impose taxes of their own. And it would make little sense for bankers to move halfway around the world to Singapore to avoid a one-off tax that would not affect future bonuses.
A windfall tax on bankers’ bonuses would not be enough, but it would be a start. The government also needs to ensure that all banks reform their compensation practices to better align rewards with performance, good and bad. That is the best hope for curbing bankers’ unbridled appetite for risk.
I suppose the Times editors know exactly the best risks for the free market to take. Sound, cautious loans to established industries like newspaper publishing.
UPDATE: As for the “empty threat” of moving away from the tax man, Goldman Sachs is threatening to move from London to Spain. I hope they do.