How About A 'Wall Street Fairness Tax'?
This column was written by Katrina Vanden Heuvel
"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." — Warren Buffett
The divide between rich and poor in America has never been greater. And Wall Street giant Goldman Sachs just widened that divide. The firm is lavishing its bankers, traders and stockbrokers with more than $16.5 billion in end-of-year bonus loot — the most ever doled out by a Wall Street firm.
Most of the Wall Street trading houses had a profitable year , but Goldman's was spectacular — or, rather, obscenely spectacular: Its profits climbed 70 percent to $9.5 billion, up from $5.6 billion last year.
The fattest of Goldman Sachs's fat cats are reported to be hauling in a cool $25 million each. (And some reports say that at least 25 of its "hottest" managers will each take home $100 million bonuses.)
These are times when the combined wealth of the 400 richest Americans (see the 2006 Forbes 400 list) — a record-breaking $1.25 trillion — is about the same cumulative wealth of half the U.S. population, numbering 57 million households.
These are also times that cry out for smart, big and bold economic policies — ones that can save America's democracy before it tips, forever, into plutocracy. Right now, it teeters on the edge.
In 2007 The Nation will launch a series — laying out the "first principles" of a bold alternative economic policy. Our focus: building a full employment economy; debunking the obsession with deficit reduction — in favor of a wise and massive public investment in our decaying public infrastructure; crafting an internationalist fair trade agenda for the 21st century, and much more.
But for now, and in the holiday spirit, let me propose that Goldman Sachs consider making the following holiday gift: Sponsor a "Wall Street Fairness Tax." Tell Robert Rubin about it. Convince him that in this populist moment, economic royalists — ones Franklin Roosevelt would have thrown out of DC — would be wise to remember what that great leader said in his second inaugural address: "The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."
The details of such a tax can be found at Jonathan Tasini's smart Web column, "Working in America" on tompaine.com. Essentially it would be 0.25 percent of the value of a stock trade — or, and this is my suggestion, a similar percentage of one of Goldman Sachs's investment deals. This tax would generate significant revenues — revenues which could be used for either a tax cut for middle or lower-income people or for desperately needed domestic programs. (I welcome hearing from economists, citizens and activists who have innovative ideas about value-added elements of such a Wall Street Fairness Tax.)
For the fat cats of Goldman Sachs, this holiday, the question couldn't be clearer: Are you defenders of plutocracy — or democracy?
By Katrina Vanden Heuvel
Reprinted with permission from The Nation