| 23 March 2009
'There is no spectacle more ridiculous than the British public in one of their
periodic fits of morality', said historian Thomas Macaulay. Now it is the turn
of the American legislature to look ridiculous with its panicky, vindictive
and quite useless legislation to control the wages of financial sector employees.
'Those who cannot learn from history are doomed to repeat it,' said George
Santayana, in another apposite quote, the history in this case being what happened
to the US when it introduced a withholding tax in 1964 on interest payable on
foreign bond market issues, something that immediately led to the creation of
the 'Euromarkets', now a trillion dollar business firmly resident in London
that entirely cuts out the US capital markets.
In fact, the Euromarkets debacle didn't harm the 'Masters of the Universe'
as they came to be called, the mostly US-owned investment banks which grew fat
on the proceeds of international capital markets - it just meant that the 60-storey
skyscrapers they inhabit with their thousands of free-spending young merchant
bankers came to be built in Canary Wharf and Frankfurt instead of in Manhattan.
And that's what will be the outcome of the Congress's futile attempt to control
the law of supply and demand on Wall Street (to subvert human nature, in other
words).
No doubt some of the more senior executives who will be punished by this measure
bear some responsibility for the collapse of the banking sector; but the bulk
of those who will suffer are just those experienced, clever traders and managers
who have been making their firms a lot of money for the last ten years, and
in many cases still are. In what sense are they to blame for what has happened?
They will either immediately jump ship, leaving their already reeling employers,
now partly owned by Uncle Sam, to fall even further into debt as the dross that
remains sets about mismanaging them in cahoots with arrogant, ignorant politicians
and overwhelmed Treasury officials; or they will turn to ever more elaborate
reward schemes designed (at great expense, by tax lawyers) to circumvent the
rules. A whole new tax avoidance industry will spring up overnight.
Of course the whole thing is mostly grandstanding by Democrats, who are flexing
their muscles after eight years of frustration in opposition; but that doesn't
make it any less dangerous. And what about all those Republicans in the House
who voted for the legislation? They haven't even got the excuse of an upcoming
election to justify their shameless behaviour. Ridiculous, indeed.
You have been reading an entry on the following blog:
Jeremy Hetherington-Gore Unleashed
Jeremy tackles the difficult issues head on!
Contact: jeremy@lowtax.net
|
Lowtax Network Portal
Front Page
Tax Jurisdictions
Featured Content
