All efforts at putting together a tax to recoup and to manage the tons of money that Wall Street firms are now raking in, after they were left for dead in the Panic of 2008-2009, are focused on only one thing it seems: Profits. For example, see Prof. Steven M. Davidoff's post on his blog, "The Deal Professor," entitled "A Windfall Profits Tax for Goldman Sachs?" (Post on New York Times Web Site, Friday, December 4, 2009). The linked post is long, comprehensive, and, well, it was written by a professor.
It may take awhile to wade through the linked post. At the end, it seems that much of the windfall profits will remain in the treasuries of Goldman Sachs and other Wall Street firms, rather than any large part of them being recouped by the United States Treasury.
What these proposals seem to ignore, as well-thought-out and as well-written as Professor Davidoff's is for example, is that the treasuries of the Wall Street firms will largely be paid out to the firms' employees, often regardless of those firms' profit-and-loss results. So long as they have money, those firms will pay it out to employees, often if not always at the expense of shareholders.
Putting Fiduciary Responsibility issues aside for the moment, these payments reflect an abuse of the existing tax system and of the Taxpayers. However, for any tax system to recoup any part of these ill-conceived payments, some factors of fairness and equity should be built in.
These concerns include treating all persons subject to the new tax to the same basic equality of treatment. One person should not be treated differently from another except on some reasonable basis that makes them different, in terms of whether they should be subject to this tax.
Reasonable equality of treatment will insure that all persons subject to the tax are treated more or less equally, and that "too big to fail" firms will not attract more and brighter employees than so-called small firms as a result of this tax.
The economic justification for this tax is clear: Most people cannot afford to finance the extravagant lives led by a few. Simple. The U.S. needs the money.
Fundamental fairness is an even more compelling justification for this tax. The few who benefit by the Wall Street Windfalls should bear the burden of being handsomely compensated as a result of those Windfalls, not the average Taxpayer.
Asking the average Taxpayer to pay for other people's benefits is socialism, and many people are afraid of and angry about socialism in the United States, it seems.
In the end, a new tax on Windfall BONUSES might address all these concerns, and then some. People subject to the tax would by definition pay a greater part of the freight for every Wall Street Windfall. A "windfall" will be pegged to the Firm's profit-and-loss results. If there is a "windfall" when measured against the chosen metric for a BONUS, such for example as when a year's results of loss and income meet or exceed a given percentage of the Employing Firm's expenses in excess of its income, then the employee receiving a BONUS under those circumstances should pay an additional percentage of it back to the public Treasury in that event.
This new taxation system would be fairer and more equitable than the system in place now. Further, it would be perceived, rightly, as fairer and more equitable. It would tend to insure domestic tranquility, and redirect lives in paths of production for society as a whole rather than for individual excess.
Insurance. In the best meaning of that word.
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