-- Posted by Neil H. Buchanan
Earlier this week, I was unfaithful to FindLaw and posted an op-ed on CNN.com's Opinion page: "Tax Wall Street's huge bonuses." Britain has recently adopted a one-time tax on financiers' bonuses in excess of $40,000 in 2009, and the U.S. is among a group of rich countries that are considering following Britain's lead. I argued in favor of adopting such a tax here. My main reason for taking this position, which I articulated at the beginning of the column, is distributional. (Rich getting richer, everyone else left behind.) There are other reasons as well, such as the ability to use tax revenue from a bonus tax to make other tax increases or benefit cuts unnecessary.
The central point of my column, however, was not to advocate the tax but to assess whether there is reason to believe that a tax on financiers' bonuses would be likely to drive people out of those jobs. That question is an interesting one, because the answer to it is not obviously "pro-tax" or "anti-tax." That is, some proponents of such a tax (such as Paul Krugman) suggest that people would leave Wall Street in response to the tax -- but such proponents think of this outcome as a good thing, because too many talented people have been enticed into financial jobs over the last few decades, impoverishing the nation by drawing those people away from more socially useful occupations. In other words, one can be in favor of the tax no matter what the incentive effect might be. (Similarly, one can oppose the tax even if it would have no effect on employees' job choices.) My prediction -- that a bonus tax, even if it were made permanent or if people expected it to be imposed periodically in the future, would be unlikely to drive anyone out of Wall Street jobs -- was thus essentially a neutral statement in terms of its possible impact on people's views of the wisdom of imposing the tax in the U.S.
One of the fun things about publishing in a national outlet, however, is that one gets to experience the mosh pit that is readers' reactions to op-ed columns. Put the word "tax" in anything, and the vitriol is cranked up to "11." ("It's one louder.") I looked at the comment board a few hours after posting, and there were already dozens of comments. (I did not indulge in reading through all of the responses, but I did scan through them to get a sense of the tone of the "discussion.") I also received a handful of angry emails from employees of Wall Street firms, plus one positive response.
Of course, even a hundred or so comments on a reader response board is a tiny slice of public opinion. It is also highly unrepresentative, with such boards being dominated by highly motivated, angry, anti-government ideologues. Nuanced debate is not the coin of the realm. Conceding that my observations are utterly unscientific, however, I will comment on two interesting phenomena:
First, there seems to be a large number of people who simply want to insist that all taxes are bad, all the time. This group has a few mantras that must be repeated. Most interestingly, the Treasury Secretary, Timothy Geithner, is a favorite weapon: "You guys want us to pay taxes, but Geithner didn't pay his taxes!" I argued in January of this year, after Geithner was confirmed, that it was a very bad idea to have him serve as Treasury Secretary after he received special treatment on his unpaid taxes. It is true that the crazies who scream about him would not be mollified if he had been dumped; but it is also true that people like me (who are not "anti-tax") simply have no satisfying answer to the Geithner embarrassment. The best we have is, "Well, yes, he received special treatment. But that's irrelevant now." It is irrelevant to the policy debate, but it is also a very unnecessary distraction. (Of course, I also happen to think that Geithner is doing a poor job as Treasury Secretary. But that is the subject for another day.)
Second, the go-to move of those who responded to my column is ad hominem attacks. Apparently, I am a jealous, pathetic loser who just wants to punish other people's success, because I made a stupid career decision and now want to lash out in revenge against the winners of the world. (Think I'm exaggerating? From one reader: "[Taxing bonuses] let's people who made a different life choice, say, academia over private enterprise, to exact a measure of revenge for their not having chosen the more lucrative professional path.") Imagine my surprise! And all this time I thought I loved being a law professor.
Of course, this "politics of envy" meme has been around forever. For example, the conservative English magazine The Economist sponsored an on-line debate in April 2009 on the resolution: "This house believes that the rich should pay higher taxes." On the web page for the debate, however, the resolution was presented under the headline, "Resenting the rich."
I suppose that there are people who want to raise taxes on the rich because of jealousy, resentment, or whatever. I know that I am not one of them, but they might be out there. What is interesting, however, is that this idea that people are proposing taxes on the rich out of envy is so reminiscent of what mothers have been telling their children for centuries: "Don't worry, Dear. The other kids are just jealous." Like all ad hominem arguments, the point is to obscure the merits of the debate. Here, however, we have a line of attack from the most privileged people on earth saying that anyone who believes that their privileges are undeserved is merely a jealous loser. Believing that must surely make it easier to sleep at night.
On a very different note, I will close my last post of 2009 by thanking everyone for reading Dorf on Law and by wishing you all a happy new year.