When I heard about President Obama’s stern rebuke to Wall Street bankers over the bonuses paid to their employees in the wake of the collapse of the financial sector and the subsequent bailout of those same banks under the Bush administration, I marvelled at his political courage in calling them out on this.
And then it got me to thinking, what would be an appropriate way to make them really earn those bonuses — after the fact. Here’s what I came up with:
To earn their bonus, they each need to visit — in person, so as to give names and faces to the victims of their moral, ethical and professional failings; and at their own expense, so as not to divert any more of the bailout funds — all the people who have lost their homes, lost their jobs, lost their savings as a result of the fiscal irresponsibility of the people earning those obscene bonuses.
And when they are face to face with them, they need to justify to each and every one of them why they deserve their bonus.
But how to make this happen? Maybe by implementing an income tax provision that would provide a penalty to anyone employed by a financial institution that benefitted from the bailout, and who received a bonus, if they did not participate in the scheme. Set a target number of affected families to be visited, based on the size of the bailout the company received and the bonus paid, then pro-rate the tax penalty on the bonus based on how closely they “make their numbers” (just to inject a little irony…).
To be effective, the maximum tax penalty applicable should be sufficiently high to make it painful enough even for these high-rollers to think twice about letting it slide — let’s say the penalty for 0% compliance were set at 1,000% of (10 time s) the bonus amount. As well, the number of visits required needs to be non-trivial — a minimum of one per week, or perhaps even more.
At 50% compliance, that is if they completed 1/2 of the required visits, the penalty would drop to 500% (5 times the bonus amount) and at full compliance there would be no penalty at all — they would still have to declare the bonus as income and pay the usual tax on it, of course, although I’m sure they all have well-paid tax lawyers or accountants to make sure they don’t pay much.
And the penalties paid should then be directed back to all the people who suffered as a result of the bankers fiscal irresponsibility.
So, let me know what you think about my idea for some social justice. And if you think it’s a good idea, spread the word — as a Canadian, I have no influence on US policy, but if you are a US citizen and think this is a good idea, let your elected representatives know how you feel.