Almost everyone agrees that Barack Obama is going to have to shelve his tax plans while he focuses on the economy. Raising taxes on higher income earners and capital gains is not exactly a recipe for escaping the recession. But with government spending climbing as we bail out industry after industry, the Treasury is going to need some new revenue. Perhaps Obama should look into taxing politicians.
It’s well known that “public servants” often go on to earn huge salaries from private firms when they leave public office. Sometimes this is well deserved. But more often than not, the huge compensation packages for former politicians are just graft. Private firms pay up for the access the politician has to those still in government, reward politicians for past favours and hope to buy their sympathies when they return to government.
Take Obama’s new chief of staff, Rahm Emanuel, who made $18 million in two years working for a financial firm after he left the Clinton administration. Keep in mind that Emanuel has spent nearly his entire life in politics. He has no known experience or skills not tied to political power. If he added anywhere near that kind of value to the firm that hired him, it was likely to be purely through his political connections. In short, his economic value to the firm was purely a by-product of his political value.
It’s not at all clear why politicians should be allowed to extract this kind of value from their skills at manipulating the government of the people, by the people and for the people. It seems downright exploitative, privatizing public value. So why not allow the public to recoup some of this value by raising taxes on politicians gone private?
Here’s how a tax directed at recapturing the public’s political earning power could work. First, take the pre-public office salary of a politician, which we’ll call their “market value.” Subtract that from the post-public office compensation. Adjust for inflation. The result should be the “political value.” Why not tax that political value? Something like a 90% tax seems about right.
There would be lots of positive externalities to the tax. Politicians would have less incentive to cater to the demands of special interests since the financial rewards would far smaller. Businesses would have to concentrate more on producing market value since gains from buying off politicians would be much more expensive.
The plans should be especially tempting for Democrats. After all, implementing it now would penalise outgoing Bush administration officials. The only downside for the Democrats is that they won’t be in power forever, and the plan would limit their upside gain. But we’re sure that President Change O. Hope won’t let that kind of corrupt motive enter into his decision making process.