The UK bank bonus tax

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I’m sure somebody will eventually be able to convince me that this is a bad idea, but my initial reaction to UK Chancellor of the Exchequer Alistair Darling’s temporary 50% bank bonus tax is why the heck not? No, it won’t raise a huge amount of money (an estimated £550 million, which is about $900 million at today’s exchange rate). Yes, it will probably result in all sorts of economically inefficient tax-avoidance shenanigans. And yes, there’s a lot of populist pandering involved. But when you read a quote like this, from the FT, it all seems worth it:

“This is extreme victimisation,” said one senior investment banker. “A lot of people have been working their tails off, never seeing their families to try and fix the problems of the past and now they are being discriminated against. It just makes me want to quit the job.”

Discriminated against? These are people who work at companies that probably would have ceased to exist if it hadn’t been for government bailouts in the U.K. and U.S. Many of them do work their tails off, but they get paid staggeringly large sums of money for it. They still have jobs, in an industry that has shed thousands of them. They are not in even the remotest sense victims. I guess we’ll find out soon if they’re quitters.

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