We need tax policy, not tax opportunism

Sadly, today’s news contained two examples of how we should not be approaching generating government revenue: a special tax or fee on (unspecified) banks which had received TARP money and application of an increased Medicare tax on “investment” income. One hopes for a comprehensive tax policy that is durable and that fosters broadly agreed upon goals for economic growth and social welfare. What members of Congress and the Administration decided to float today was just the opposite: an opportunistic grab at temporary targets of perceived riches or of populist disdain.If we want more robust economic activity, adding additional tax burden (a new, unrelated “Medicare” tax, at an increased rate, at that) on the results of investment is not the way to get it. Raising the price of success means that we will get less of it.

Imposing a punitive tax or fee on the banks (even those which have repayed all the TARP money…with interest) reminds one of Willie Horton’s response when asked why he robbed banks. Such a tax/fee would bear no relationship to the expense that the government incurred (…repaid, with interest!) and could even violate the Constitution as a “Bill of Attainder”, levied specifically at individual entities by government officials.

Probably, neither of these proposals will end up as law; forces in opposition are probably strong enough. What is especially disheartening, however, is the unapologetic effort to pander to populist misunderstanding of what TARP intended to do and the success it has had thus far and the brazen grab for money wherever it can be found. Where are the statespersons…on either side of the aisle and at either end of Pennsylvania Avenue?