Britain's one-time tax on bonuses

Kenneth Feinberg has proven to be a thorn in the side of top Wall Street firms, the TARP babies anyway. The Fed's pay rules are also a pain. And firms are gearing up for more PR angst as they dole out big bonuses for 2009. But for a direct attack on bank bonuses, check out Britain, where the government will levy a 50 percent one-time tax on banker bonuses above $40,700, reports the New York Times. U.S. firms would be affected, as all U.K.-based subsidiaries will be subject to the tax.

The issue is whether this sort of tax will spread to the U.S. So far, there has been no real outcry for such a tax, except in the aftermath of the AIG pay fiasco, when some politicians threatened to tax the bonuses at 100 percent. But Representative Dennis J. Kucinich has proposed a 60 percent tax on bonuses paid by TARP banks. The Times says the U.S. tried such an approach years ago with no success, as firms circumvented the new taxes with deferred compensation and the like. I doubt the idea will gain any real steam in Congress. But you never know. Same goes for a tax on financial transactions. 

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