Neil Sinhababu and Nicholas Beaudrot's political blog
Saturday, February 7, 2009
Sign Me Up For the Sinhababu Tax Plan
With the news (via AmericaBlog) that GS will pay back the government early to avoid "[c]ompensation restrictions and certain capital requirements" (read: they want to re-open the casino and have their employees get rich off of it) and CEOs like Reed Hastings (of Netflix) saying we should raise their taxes, the Sinhababu tax plan—instituting high top marginal rates to force even the highest-paid employees to work for long-term rather than short term success—is sounding more and more appealing to me. The UK currently has a top marginal rate of 40%, and Canada's is 29% (!!), so we will have to figure out how to stop every corporate HQ from moving to Toronto if we jack the top rate to 55%. But it would be a start.
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5 comments:
But its not personal income that is the worst problem ... its the capital gains and corporate income tax rates.
Put the top tax rate back at 40%, don't allow capital losses to shelter capital gains on assets held less than five years, and put the two tier capital gains taxes back in place.
Of course, first we need a couple more Senators ... as long as 40+ Senators insist on pathologically insane fiscal policy, the country is in serious trouble.
Ha, I like your name for it, Nick. And I endorse Bruce's suggestion. I also like the better uses this money would be put to.
I wouldn't worry too much about Canada. Look down further on the linked page and you find that the provinces have top rates anywhere from 10% (Alberta) to almost 18% (Nova Scotia). No word there on Quebec, but IIRC last time I looked they were on the high end. Now, I know nothing about deductibility of provincial taxes against federal taxes in Canada, but it looks like top rates there could be as high as 47%,depending on the province.
Seems I was right. The top rate in Quebec is 24%.
http://www.revenu.gouv.qc.ca/eng/formulaires/tp/tp-1-v.asp
Then go to Work Charts and chart 401.
Regarding Bruce's comment, I don't think the corporate tax rates in the U.S. are the problem. They're already on the high end of rates for the developed world.
http://www.worldwide-tax.com/
I think there is a problem with the deductions and credits allowed under U.S. tax law, but that's a separate issue than the rate, and shouldn't be solved through a higher rate. OTOH, the U.S. still differentiates between dividends and interest regarding deductibility, which at least partially explains the U.S. preference for high leverage (if you have to raise more capital, raise it from the guy whose income will result in a deduction to you). The UK and Ireland allow dividends to be deducted to the extent they're paid out of income already taxed (so, once you're out of retained earnings on a tax basis you can't pay deductible dividends).
Regarding capital gains, I wish there was some way to index gains (and interest) for inflation - then there would be no case at all for different tax rates. Unfortunately, that would be an administrative nightmare, so we're left with a suboptimal compromise.
I think they should limit CEO compensation for any business that receives federal aid, plus limit lobbying by aid recipients as well. This should apply to food companies that get subsidies as well.
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