Forum Post: Demand the "Fund Manager Tax"
Posted 12 years ago on Oct. 11, 2011, 4:50 p.m. EST by jssk
(170)
from Naperville, IL
This content is user submitted and not an official statement
First of all, this is not class warfare, it's not double standard on any group of people. This is simple fairness, and fixing a logic loophole in Wall St. compensations.
Let's compare, say, an auto factory worker and a bank manager. The worker gets paid certain amount to make a car door. And the pay doubles for her to make two car doors. Because it requires twice the time, or increased skills to double the production in less than double the time. Either way, the effort required from the worker is PROPORTIONAL to the wage.
However, for an investment/fund manager, managing $2 billion requires no extra effort compared to managing $1 billion, yet her pay would be doubled, given certain amount of return of the fund. One might argue the more money a manger manages the more pressure and risks are involved. But it is not true in this case. First, as we all know, there is no risk since the managers don't bear any loss in the investment. And while jumping from a casual investment of thousands to millions might bring more pressure to the investor, jumping from millions to more millions like fund managers do will not result in increased pressure. In other words, they are collecting the investment returns of other people's money without bearing the risks.
And it's exactly this risk-free, totally-unrelated-to-effort-required type of pay for the likes of fund mangers, bank CEO's, etc. that resulted in the reckless management style on Wall Street. And when things inadvertently went bad, we are the ones that suffer from the financial crises, tax payer bailout, and a stagnant economy.
Therefore, I think it should be one of the principle goals of this movement to advocate and demand the creation of a tax on any RISK-FREE COMPENSATION PROPORTIONAL TO THE AMOUNT OF CAPITAL INSTEAD OF AMOUNT EFFORT REQUIRED. And this tax should be very high compared to other types of income, like in the vicinity of 80%, in order to discourage this source of irresponsibility.
These are my initial thoughts, feel free to help build on it, revise it, find better terms and a name, make suggestions, and spread the message.
Thanks!
Uguysarenuts,
That was an analogy to show the different style of compensation. I compared steering a billion dollars capital to 2 billion dollars (for which the effort is the same, but the compensation doubles), nobody said what you accused, please read first.
brookej123,
I agree, every time we ask something for ourselves, they label us with "class warfare", "punishing success", as if normal folks making average salary, like workers, teachers, firemen, are all failures.
This is a dumb post. More effort to make a car door than steer a billion dollars of capital? Pull your head in sunshine.
You are mistaken. As Warren Buffet said, "There is class warfare, and we [billionaires] are winning".
A war against the middle class has been waged since the Reagan administration. The income of the top .01% has soared, while median income and the middle class have declined. Perhaps 15-20 of the wealthiest families in the country have been leading this war, Kochs to the fore.
Re: mindhawk,
What I propose here is not a tax on certain occupation. It could be for many occupations, but they are assumed mostly to be in the financial industries.
These types of compensation essentially can be called "risk-free dividends". the two categories for our current income tax include regular income for work or service provided, and capital gains. This "risk-free dividend" is neither of the two. First, the compensation is not proportional to the amount of work done; Second, it's not their money.
So what I'm proposing is merely a new category in the income tax system. Any compensation meeting these criteria (proportional to money involved regardless of work and expertise, the person doesn't bear any risk) should be subject to extra tax.
This could be for a lot of occupations, I called it "fund manager tax" because I couldn't find a better term. That's where I need everybody's help.
Rather than backing these institutions I would prefer to let them fail. I would also restrict their size. I am also for many new taxes on financial transactions that would target these people. But I am not for higher taxes for specific occupations, I think there should just be a very heavy tax on the top bracket and that financial institutions should be prevented from growing too large.
If you want to propose something to add to my list of demands, I am all ears:
http://occupywallst.org/forum/my-proposed-demands-1-5of-23/