Simon Johnson

Bank Tax Arrives

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The Obama administration tipped its hand today--they are planning a new tax of some form on the banking sector. But the details are deliberately left vague--perhaps “not completely decided” would be a better description.

The NYT’s Room for Debate is running some reactions and suggestions. The administration is finally getting a small part of its act together--unfortunately too late to make a difference for the current round of bonuses. 

We know there is a G20 process underway looking at ways to measure “excess bank profits” and, with American leadership, this could lead towards a more reasonable tax system for finance. In the meantime, my point is that taxing bonuses--under today’s circumstances--is not as bad as many people argue, particularly as it lets you target the biggest banks. 

[Cross-posted from The Baseline Scenario.]

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