I’m not a huge fan of punitive taxation. I prefer to see taxes levied such that they do not distort incentives significantly except possibly in rare cases where individual recklessness causes undue public cost. But here’s the deal. Government relaxed regulation on Wall Street in the expectation that it would police itself. If you are a Wall Street executive you stood to make bundles of cash out of the deal, which no one has a problem with. Seriously, go to town, we don’t care. America believes in Capitalism, and we would all prefer it to be us who wins, but we don’t begrudge you your success.
If, on the other hand, giant Wall Street firms which have grown “too big to fail” require massive taxpayer bailouts to stay afloat they should not also – at the same time – take huge bonuses for themselves. I don’t know much about the culture of high finance, but I’m sure there’s a mechanism by which you enforce commonly acceptable standards of behavior. If you don’t, or if you did not employ it to prevent taxpayer outrage, then that is a spectacular failure of self-policing.
Not only will the honor system be revoked, but there will be a price to pay for failure. I’m not sure I’m keen on the mechanism, but it has to be done and most other avenues have been forclosed. If you are part of Wall Street culture and think you weren’t involved, you were. You really can’t complain.
- jack*
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