SIMON JOHNSON JANUARY 12, 2010
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.