As London bankers threaten revolution over a new 50% bonus tax, some Wall Street observers are imagining the panic that would ensue if we implemented the same thing here:
Just think of Mad Max visiting the Upper East Side: Long faces at the jewelry counter at Saks Fifth Avenue, shuttered sushi joints and empty midtown office towers. Bankers and their families flee the city — Tempur-Pedic mattress strapped to their Mercedes SUVs — for tax – friendly havens around the world.
Well, no. We know exactly what would happen if we put a 50% tax on bonuses: Absolutely nothing.
Because we already have one.
If you live in New York, by the time you get through paying Federal, State, and Local, as well as Medicare and Social Security, you’ve surrendered at least 50% of your bonus.
(OK, yes, the London tax is a “surtax,” which would presumably take 50% off the top. Assuming all the other taxes remained in place, this would leave bankers with about 25% of their gross bonus, which would indeed be horrifying.
(Of course, if taxpayers hadn’t bailed out the banks and then subsidized them all year with free money, the bonuses would have been a good deal smaller–zero, even. So pick your poison.)
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