An exercise

My internet’s down, so this is short, an exercise for the reader.

On Wednesday, Britain’s Chancellor of the Exchequer, Alistair Darling (and let’s just pause a moment to savor the delightful Britishness of “Exchequer,” “Alistair,” and “Darling”), announced that a special tax of 50% would be levied on bonuses of more than £25,000 paid to bank employees.

Why is there no similar proposal from Tim Geithner?

19 responses to “An exercise”

  1. lane says:

    because britain is a truly socialist nation and this country’s government is owned by the banks.

    americans are so loony that the slightest move toward a truly cooperative government in regards to health care sets of a panic of “obama’s a socialist!” and “i want my country back!”

    could you imagine what a 50% tax announcement would trigger in this country? from people that aren’t even bankers?

  2. Rogan says:

    If such a tax existed here, all of the bank execs would quit, and there would be nobody to replace them. This would destroy our country.

  3. Dave says:

    Here’s the Guardian about the proposal; a lot of people over their are clutching their pearls about bankers leaving their jobs for greener pastures. Here’s the latest, that France is going to tax bonuses as well. This is bad news for the U.S., since we can now expect an influx of bonus-seeking British and French parasitesbankers.

    Why are Americans in solidarity with the bankers, rather than with fellow workers?

  4. Dave says:

    A study showing that bankers personally made money even though they drove their institutions over the cliff by taking risks.

  5. lane says:

    “Why are Americans in solidarity with the bankers, rather than with fellow workers?”

    American’s do this.

    They want to see themselves as prosperous. So they hate unions, they love yuppies and drink artisnal beer. They actually think they ARE bankers, or that they have something in common with those classes.

    GHW Bush played this schism to the hilt. Most American’s don’t even know what Greenwich Connecticut is, let alone, what it stands for.

  6. ScottyGee says:

    Whether or not I believe it would be a good idea, I think that a tax aimed at targeting a specific population would be seen as unconstitutional based on Article 1, Section 9, which calls for no bills of attainder (laws that target a specific group or individual).

  7. Stella says:

    I wish I was called Stella Darling.

    It is interesting living here and then going home to the UK. My views have been moderated by ten years of the U.S. but then I remember how in Britain most people think it’s wrong to be rich. Overall, I think this is an unhelpful attitude, but in the current situation it is satisfying to see some people being held accountable for their actions.

  8. Stella says:

    Does TGW exist in a different time zone?

  9. Dave says:

    But you are darling, Stella.

    Scotty, it’s certainly constitutional to tax certain activities or certain types of income more than others; bills of attainder are much more specific.

  10. ScottyGee says:

    9: I disagree with you on this one. The typs of taxes you speak of are evenly divided among everyone who partakes in the activity in question. For example, everyone pays tax for gasoline, or cigarettes. The problem would occur if store clerks payed more tax when they bought gasoline or cigarettes.

  11. Dave says:

    I’m just gonna let you be all WRONG ON THE INTERNET on that one, Scotty, because I’m not a constitutional lawyer. But think about the different tax rates the government levies, perfectly constitutionally, on different kinds of income. That’s all this would be.

  12. ScottyGee says:

    Give me a for instance…

  13. ScottyGee says:

    …and I’m cool with being all WRONG ON THE INTERNET.

  14. Nat says:

    I think you guys are referring to two different types of taxes: sales tax vs. income tax. Sales tax is dictated by the State Board of Equalization and is generally a set amount per city, the income tax is the big jerk and determined by the IRS and the Franchise Tax Board. The income tax is determined by income – the more you make the more taxes you pay. This year, if you are over 250K, you will pretty much end up paying half, but there are other ways to deal with it (depreciation, assets, charity, business expenses, etc.)
    I can ask my attorney and my accountant, if you guys need the actual articles and numbers. I agree that it should so be deemed unconstitutional, better yet illegal, although I wouldn’t mess with Uncle Sam and his taxes; I hear he is mean.
    PS. There is nothing wrong with trying to find out and discussing things, on the internet or not.

  15. ScottyGee says:

    I wasn’t confusing the two; we were just discussing taxes in general. I may be totally wrong on this, but income tax is determined solely by the amount of money one makes vs. the number of dependents one can claim, right? For example, a millionaire doctor pays the same income tax as a millionaire tobacco grower, right? To my mind, this is the point that our disagreement is based on, and not whether any of this is ethical or moral. I believe that a higher rate of income tax that targets a single group (not based on income vs. dependents) would be deemed unconstitutional. I’m not a con-law guy or a CPA, so I may be totally off on this.

  16. Nat says:

    I don’t know much about this, but from my experience, it depends on the type of income and how you claim it. There are gazillions of categories. For example, for my company, I pay sales tax, payroll tax, and income. The income is separated into many different categories (service, parts, a whole bunch, just don’t wanna go into details because of the public space here). Then once all that is paid, I will get a check and will have to pay personal income on that too. So, if the dentist and the farmer pay through their company, they will most likely pay many different categories, which would drastically change the amounts. But their personal income taxes hypothetically should be the same, but will most likely vary depending on how good their accountant is and what they are writing off. Also, an individual’s personal income is very much connected to the company income, especially for small businesses. But I know what you mean though, it’s just, there are so many tax bills and laws, they get updated every year and get sent in the mail in inappropriately giant booklets. I trash them. There is no way for a normal non-CPA mortal to know that. Each bill and each category has an addendum. I’ll ask around and will post an answer for you.

  17. Nat says:

    I just got this from my attorney:

    “Regarding a tax being a bill of attainder. Maybe. Bills of Attainder are punishments. So if the tax were on a specific population, I suppose that could be viewed as a Bill of Attainder, and may violate the Equal Protection and Due Process clauses of the constitution. But, if it were on an action that only a specific group of people participated in (ie. practicing medicine), then that would probably be ok.”

  18. Dave says:

    I was thinking of a few things. For one, capital gains are taxed at a different rate than earned income. Two different types of income, both taxed, just different rates. Even with just earned income, remember all those weird lines on the full 1040 that allow you to exempt certain types of farm income, or the ones that ask if you’re a blind veteran or whatever?

    What makes some ways of classifying income or people constitutional, others unconstitutional? My guess is that it has to do with why you use a certain characteristic to designate a class. As Nat’s attorney says, bills of attainder are extrajudicial punishments. So Congress can’t say, “We don’t like Bill and Sue, so we’re going to pass a law that says ‘Bill and Sue forfeit half their income.'” They also can’t say, “We don’t like Bill and Sue, so let’s look at what they have in common. Oh, it turns out they’re the only two people in the country who raise wombats. Let’s pass a law that says all wombat raisers forfeit half their income.” The class is drawn in general terms but for the purpose of picking out specific, pre-determined individuals or classes.

    It’s a different thing for Congress to say, “We find that for reasons of public policy (such as the way big bonuses contribute to unsafe risk taking and unacceptable systemic instability) we want to discourage certain business practices of financial institutions. We will therefore levy a special tax on one of these practices because we believe the tax will make the economy more sound.” The class is generally drawn, for sound public-policy reasons, and only accidentally picks out the people who it ends up picking out.

  19. ScottyGee says:

    Okay, all of theis I get. I just misuderstood the question. A “special” tax is much different to my mind than the targeting of certain individuals to pay a higher rate of the same type of tax that everyone pays. Okay, we’re cool…