Corruption Tax

Glenn Reynolds has been making hay with a proposal to raise taxes on a rich elite:


© Teflon

My proposal was to put a surtax — 50%, say, or maybe 75% — on the post-government earnings of federal officials in excess of their government salaries for the first five years: Leave a federal job paying $100,000 a year for an industry job paying $600,000 a year, and you’d pay a $250,000 surtax. After all, with folks leaving the Obama administration, as they left previous administrations, for salaries several times what they earned in the public sector, and with excessive entanglement between government and business a growing problem, why not use the power of the IRS to modify behavior?

Obviously a great idea. Not because I like discriminatory taxes, and not because I like to take away the perks that people earn through their jobs (I approve of insider trading, for example), but because it’s a wonderful hack on the incentives system.

Let’s practice some arguments:

  • The institutions that support this elite are paid for by the tax-payer, the connections that Government elites make during their career in them is therefore an asset created by tax-payers and we deserve our fair share.
  • The institutions of government are like roads for scumbag lobbyists to get around. The tax-payer funds roads and road users are all expected to pay our share for them, why shouldn’t people who cruise between public sector institutions pay a contribution towards them afterwards?
  • This is a limited and proportionate measure to tackle corruption, we aren’t tyrants and there are no plans of any kind to increase the tax-window to beyond five years.
  • A tax of 50% is completely affordable, it actually represents a tiny fraction of lobbyist’s overall revenue.
  • We punish bankers with high taxes, why not punish fat-cat public sector elites and scumbag lobbyists with taxes too?

None of those arguments respect the Rule of Law, Equality Before The Law or Individual Rights. A principled Parliament and press and a politically educated people would toss them out, but we have none of those things. It’s possible though, that by attacking the corrupt parasites in the public sector that they may start to argue for the Rule of Law, true equality and individual rights? Maybe, as they die by their own swords they’ll see the error of their ways.


  1. I know the article was meant (in part) to be ironic….. but……

    Why not just pay top government people less?

    The idea that high pay means better “public service” is totally false – and it is quite a recent policy anyway.

    In Britain the policy only really became extreme under the “New Labour” government elected in 1997 – why not reverse the policy and pay top government employees less?

    In the United States I rather doubt that top government employees earned very much before the Federal government was unionised (under the Kennedy Administratiion). Why not make hte Federal government nonunion again? After all even Franklin Roosevelt (“FDR”) denounced the idea of the unionisation of government work.

    “Government employees should be paid the market rate for the job”.

    The “market rate” is the money for which someone will do the job.

    One could cut the pay (and perks) of these top government jobs by 90% (yes 90%) and still get plenty of people who would do these jobs at least as “well” as the people who currently do them.

    The scary thing is that I suspect that is now also true with the big banks.

    After all how much skill does it take to borrow money from the government (the Bank of England or Federal Reserve) and lend it back to the government (via buying Treasury stuff) at a higher interest rate?

    One could pick someone (at random) from the unemployment lines to do this “job” and they would do it just as “well” – so why are bank employees paid vast sums of money?

    And when the bankers do try and do smart things – it is really dumb.

    For example buying State and local debt because “these bonds pay more than the Federal ones”.

    That is because the State and local government are going to DEFAULT you ……….. interesting people.

    You might as well buy Argentinian debt (yet again).

    Accept I suspect some people are making vast bonus payments doing just that.

    “But Paul – the interest rates they are offering are wonderful….”

    I give up.



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