Expert navigation advice from the bridge of the Titanic

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.

3 Comments

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3 responses to “Expert navigation advice from the bridge of the Titanic

  1. Greenwich Ex-Pat

    I like Ike!

    http://www.gather.com/viewArticle.action?articleId=281474977623449

    (Ex-Pat puts on flame-retardant suit)

  2. Anonymous

    Big taxpayers tend to be averse to being ripped off by any welfare state…esp one “run” by community organizers who don’t understand basic business/finance/economics

    Bet many smart, wealthy guys in Manhattan/Greenwich/SiliconValley will look closely into relocating to Dallas

    The guys in London are generally less shrewd than their competitors in NYC/CA/CT

    But unlike ’70s, we live in era of G550/Net/Blkberry…and globalized arbitrage

  3. Greenwich Ex-Pat

    Did anyone ever do a study on how many Connecticut residents became “virtual” residents of Florida after the state income tax got passed? I knew a couple of these types. Very proud of the fact that their legal residence is in Fla, but spend most of their time in CT in the “second” residence.