Look out Haiti, another storm is brewing. This one is sending shockwaves all the way from Washington. Texas Republican Senator John Cornyn announced today that he would be proposing a bill to tax each Haitian that receives money under the $100MM aid package by the Obama administration. Building off the principles of the Obama bank fee program, and fueled by general support from the outraged public, the new 50% tax on aid money stands a fighting chance to pass through the Senate.
When asked to justify his decision to propose such a controversial bill, the veteran Senator said, "The American taxpayers deserve to get every penny of these relief funds paid back." Going even further the Senator added, "I wouldn't be surprised if this type of legislation is just the tip of the iceberg." These comments certainly appear to hold a lot of water. Already on Capital Hill there is talk about retroavtive taxes on former disaster relief recipients. In fact, several people in the Office for Government Accountability have formed a local Washington DC club named The American in the Red and Crossed.
ARC President Hugh Phillips was asked why he supported such a controversial cause. "America has to wake up and take a stand against programs that cost taxpayers money without and hope of repayment. Tsunami smumami, you want my money? Try paying it back. A levy breaks and washed away your city? How about we levy taxes against the free money you received? If we tax these people we will pay off the national debt in no time!"
Ernest French is taking things even further. Mr. French is an attorney by day, and a tax advocate by night. French is starting to gather momentum with his idea to apply a 50% tax to all members of the armed forces. His rationale? Simple. The military is the most expensive and drastically unprofitable national program on the books. $1.5 trillion dollars is spent each year on the military. French figures that a 50% tax would repay the national deficit in 10 years. When asked about whether a 50% would drive people away from serving their country, French replied, "If they are rich enough to give people who are deployed free room and board, free flights, free guns, free ammunition, free cars, etc. they can afford to pay tax."
All of these knee-jerk tax proposals seem ridiculous on the outside, but in spirit they mimic the exact thought process currently being weighed against the banking industry. If the government really wanted to create a win win situation on Wall St. they would simply force companies to pay out bonuses as all-stock awards. The banks would win because they could retain talent (not to mention lock them in with vesting schedules), and the government would win since they would still be able to tax people on the stocks when they were sold. In actuality, the government would probably raise more money over the long term since the prices in the markets currently are so low for financial stocks, that by the time the shares are exercised the government will be able to claim taxes on a vastly appreciated asset.
The thought of a 50% bonus tax is a joke. If you want to see the effectiveness of such a tax, simply Google what happened to London when they did the same exact thing last year. Estimates indicate that 40% of the banking industry has left London alone. A good number of those bankers have left the country. That means that not only is the financial system in ruins, but the country is actually collecting less tax revenue. Punitive taxes are not the answer to America's debt problems. Financial accountability and fiscal discipline are.
