Thursday, January 29, 2009

A modest proposal

By Nancy Jane Moore

The New York Times reports that Wall Street bankers and brokers were paid $18.4 billion (yes, that's billion with a "B") in bonuses in 2008. The average bonus was $112,000. The New York state comptroller says that even though that figure represents a substantial decline from 2007 -- when the bonuses totaled 32.9 billion -- it was still the sixth best year ever for bonuses.

I don't think it will surprise anyone to learn that 2008 was not the sixth best year for Wall Street profits. The brokerage units of these firms lost more than $35 billion, according to the comptroller.

Let's not forget that these same financial firms that paid out those bonuses got a huge influx of taxpayer money from the TARP (Troubled Asset Relief Program). Apparently it's "unclear" to the comptroller whether the firms used TARP money for the bonuses.

But of course they did. The bonus checks may not have come out of the account where they deposited taxpayer dollars, but the TARP funds freed up other money for bonuses.

So I've got a suggestion: Let's impose a 100 percent tax on all 2008 bonuses paid by any company that got even a dime of public money.

While we're at it, let's set a 100 percent tax on all 2008 bonuses paid to any management and executive employees in any company that is laying off workers due to the recession. After all, it's a good bet that our tax dollars are going to end up paying for extended unemployment benefits for those workers -- since there aren't a lot of jobs out there -- and many of them may end up needing Medicaid or other forms of public assistance.

Given the amount of deficit the government is going to run due to the TARP and the stimulus package that will hopefully help people get back to work, we're not just spending our tax dollars; we're spending the taxes that will be paid by our children and grandchildren.

The most ironic comment on all this is found at the end of The Times story: A poll indicates that 46 percent of financial firm employees think they deserved more money. After all, they worked hard inventing the house of financial cards that came crashing down, leaving us all in the hole.

I've got just one question for them: Whatever happened to personal responsibility? Or do those words only apply to people who earn the U.S. average paycheck (from 2006 figures) of about $47,000/year? (Did you notice that the average bonus paid to financial firm employees was more than double the average wage?)

It wasn't the average working person that got us into this mess. Oh, I'm sure some of those people bought more house than they could afford in the heated housing market of the last few years, when every expert out there was screaming that buying houses would make you rich. And they probably ran up their credit cards, since the cost of living kept going up while wages stayed pretty flat.

But it was the rich -- and those trying to get rich in this runaway economy that increased the gap between rich and poor to levels surpassing that of the robber baron years of the turn of the 20th Century -- that bankrupted our economy.

So let's tax the rich. And let's tax them personally. Take 100 percent of all bonuses, and of all pay above, say, $500,000 (that's about 10 times what the average person makes; surely that's enough for anyone to live on). And don't let them deduct their stock losses against that income.

Sound too draconian? Think about it like this: If we don't get the economy back to health, so that we can deal with climate change and the other major problems facing the world, we may be facing disaster that only those of use who write science fiction can actually imagine.

In a few years, the solution may not be to tax the rich. It might be eat the rich.


Diane Silver said...
This comment has been removed by the author.
Diane Silver said...

(Diane whistles and stomps her feet in appreciation.)

To make matters worse (that is, worse for us regular folk), (a) the Wall Street bonuses are just the beginning and (b)complaining about people who ruined their companies and ruined the nation's economy is apparently anti-capitalism. Heck, I thought this was just holding people responsible for their actions.