Why won't they tax Wall Street?

[Hannah Bell]

http://socialistworker.org/2010/02/12/why-wont-they-tax-wall-street

WITH THE worst economic downturn since the Great Depression entering its third year, on January 19, New York Gov. David Paterson proposed yet another state budget that makes major cuts to vital public services--most notably, public education and health care. Paterson's budget reduces funding for K-12 public schools by $1.1 billion and health care funding by $1 billion. In New York City, this will mean cuts of $469 million in school aid, $302 million in local government aid, $53 million in funding for social services and $4 million for transportation.

Higher education is also being cut, to the tune of $104 million for the City University of New York (CUNY) and $118 million for the State University of New York (SUNY). These cuts come on top of $410 million in cuts to SUNY and $160 million to CUNY in the last two years.

But the recession's pain isn't being felt equally by everyone. Wall Street firms recently handed out massive bonuses to their employees. The Wall Street Journal estimated that total compensation for employees at major Wall Street firms will reach $145 billion, an all-time record.

A windfall tax of 2 percent on these payouts would be enough to prevent all the proposed cuts to health care and education. It's also worth recalling that it was the financial crisis caused by Wall Street's irresponsible speculation on home prices that caused this recession in the first place...

Actions are being planned for March 4 at Hunter College, Brooklyn College, City College, Borough of Manhattan Community College, CUNY Graduate Center and Queens College. Outside New York City, actions are being planned at SUNY Stony Brook and SUNY Purchase. The demonstrations will take place in the morning and early afternoon, and will be followed by a joint rally at 4 p.m. at Paterson's Manhattan office and a march to MTA headquarters.

[cliffordu]

1. Great post, K&R.

[truedelphi]

2. And the other thought, one that the "old" Obama once supported was a direct

.02 cent tax on each Wall Street transaction.

But now this Administration is so deeply in bed with the Wall Street crowd, I don't think that would go very far.

[DailyGrind51]

3. "They" are wholey-owned subsidiaries of Wall Street who will not bite

the hands that feed them!

[dkf]

4. On the other hand New York has already been the beneficiary of

Taxes on ridiculous bonuses for all these years while all the rest of the states didn't get much but are just as affected by wall streets bad behavior.

If we are able to cut bonuses and proprietary trading permanently won't New York have to think about future lower revenues?

[geckosfeet]

6. Hey. You're right. Give them BIGGER bonuses! Means more tax revenue!

Genius.
:dunce:

[dkf]

7. Lol.

You gotta admit New York was in better shape than say Michigan or anyone of the industrial production type states.

Federal government got some too. The people that made out like bandits were the hedged funds that classified their earnings as capital gains instead of wages. They got a lower tax rate and probably didn't have to pay social security taxes either

[KharmaTrain]

5. 145 Billion Buys A Lot Of Poutrage...

Listening to the teabaggers and other "we pay too much in taxes" crowd is that politicians are scared shit of them...or worse, the label of being a "tax and spender". It's almost as bad as being labeled a "librul". We're seeing it in it with the tax break to 95% of the country, yet the corporate media obsesses on the 5% who will see their taxes go back to where they were in 2002. The cut was totally ignored. Thus when there's talk about a windfall tax (which I'm firmly in favor of on several fronts) the politicians fear the poutrage of Faux Noise and hate radio and the other paid -for mechanisms of the wealthy to castigate the politicians and let the poutrage whip up the teabaggers and other "so-called" libertarians.

There is a growing undercurrent of resentment for Wall Street but it still hasn't hit the stockholder meetings and board rooms. The gridlock they're helping to pay for inside the beltway protects their games and wealth...and their astroturfed "interest" groups are working overtime to make sure their interests remain well protected.

[Statistical]

8. One thing I never understood is why people propose complicated solutions like windfall taxes?

Money is money. I don't care if an actor makes $20 mil on a movie, and inventor makes $20 mil on a patent, a singer makes $20 mil on some pop BS song.

Raise the tax brackets.
Raise tax on capital gains.

A windfall profit tax aimed one one industry? Seems pointless.

If 2% "windfall tax" on $145B is enough to maintain services imagine what raising the top bracket 4% on trillions of dollars in income and restoring capital gains taxes (+25% for top bracket) would do.

[Greyhound]

12. Better yet, redefine all income equally and include all entities based or doing business here.

Fix the estate tax with a progressive structure starting at $2M - $3M.

[blindpig]

9. I guess that beats a blank.....

tho' in my dreams the financial sector is nationalized, problem solved.

k&r

[Igel]

10. They do.

You confuse bonus with income with payout. They're far from being the same thing.

The income that's income is taxed as income. It's money you've earned (in some sense) that's paid to you in a calendar year. NY's tax rates aren't all that regressive. When cash bonuses fall, NYC and NYS have budget crunches. When they rise, NYC and NYS are happy.

Now, that $145 billion is divvied up over thousands of people. Some get many millions of dollars. Some get a few thousand. It's not all all that much "windfall." I'm not sure I want to penalize an assistant making $30k who gets $2k with the same kind of feel-good punitive tax that the broker who lost the company $125 billion in the last year but whose multiyear contract calls for a $2 million bonus gets. And the portfolio manager who earned the company $125 billion? Sure, give him a bonus--he likely did good. (Unless we really want them to fail, in which case we can stop complaining about the lack of loans and the likely point at which government securities require higher interest rates to be sold. Just cut to the chase now and say $0/year deficit and cash-and-carry on housing.)

Not all of it is money. A lot of it is deferred stock options. What they'll actually be worth is anybody's guess. But when they're redeemed, they'll be taxed at then-current rates.

Some of it is deferred income. They get credited with it now on the books, but there's no payout so it's not taxable. It's income they get later, perhaps when they retire, perhaps when they leave.

Some will be retirement benefits, pure and simple.

As opposed to pure and simplistic.

[Hannah Bell]

13. NY is currently cutting public employees' jobs, salaries & benefits

because of budget crunch, despite the biggest payouts to wall streeters in history, so your assertion here:

"When cash bonuses fall, NYC and NYS have budget crunches. When they rise, NYC and NYS are happy."

is false.


"Now, that $145 billion is divvied up over thousands of people"

The majority goes to those at the top.


"A lot of it is deferred stock options...Some of it is deferred income. They get credited with it now on the books, but there's no payout so it's not taxable."

It's income & assets that they're being given control of now. And as you say, not being taxed on.

[lib2DaBone]

11. ..a 1% Tobin tax on all their funny-money CDO's and derivatives...

..It would raise billions.

Instead.. they want to give the Banksters Billions in bonuses.. and extend the Social Security Retirement age so grandma has to work until she is age 90....

One of these days... people are gonna get pissed.. and say ENOUGH to these SOB's.

[Hannah Bell]

14. k

[gleaner]

15. Imagine what a ...

windfall profits tax on the health insurance companies, pharmaceutical companies, producers of gas, oil and other fossil fuels and banks could do. They would probably wipe out the deficit. But I doubt that we will ever see taxes like that or a reasonable tax rate for the rich because they pay for the futures of all the politicians they bribe.

They don't call them bribes, they call them political contributions. But if you were a politician in the frame of mind to sell yourself, what would you rather have? Ten dollars from an individual or family struggling to just barely make it or millions from the special interests who are helping to put us all in the position of having to struggle so hard just to get by?