Let’s Lynch Merrill

The ideal socialist state is on the other side of the ocean. About six hours away, flying. No, it is not Cuba, it is not Venezuela or Morales’ Bolivia, it is the United States of America that paralyzed capitalism this weekend. The fury over the bonuses at (life) insurer AIG has taken such serious forms that Congress is preparing a law that levies 90 percent taxes on top earner bonuses (at an income under U.S. $250,000).

80 percent of AIG is in the hands of the American government, which paid U.S. $2.8 million (1.6 million euros) in overdue bonuses.

Joop den Uyl, the reddest premier of the low lands,* has never dared to force state taxes that high. Holland’s highest tax level was once 72 percent. Not even the Socialist Party wants to go back to that.

Barack Obama surpasses the Dutch socialists in the curbing urge. Wouter Bos, the social-democratic treasury keeper, is, compared to the American president, a right little fellow.

First, he does not want to ask about the bonuses paid to the ING top. The plea is “contract is contract.” Second, even though Bos is annoyed by the bonus culture, he does not want to tax the system so heavily that performance incentives disappear.

Bos has taken a number of measures though to deal with bonuses (and then mainly with severance schemes), but his measures have been very modest. Last year, the Second Chamber (the Dutch Senate), adopted a little law in which it was declared that leave bonuses above 500,000 euros resulted in an employer tax of 30 percent. The Council of State, taxmen and market economists had to laugh about this childish symbolic legislation that applies to not more than a couple of thousand employees and does not have any effect from a financial perspective.

In America, the pendulum swings even further now. Some bankers already noted anonymously that we are dealing with a new witch-hunt, especially now that the Public Prosecutor is asking for names of bankers who have received bonuses from, among others, Merrill Lynch, also called Lynch Merrill.

Some see reversed McCarthyism in this anti-rich trend. McCarthyism was an anti-communist movement that submerged 50’s America in paranoia, fear and disgust.

Who protects the bankers?

Koster and Jojanneke almost feel sorry for them. Socialism has a new face. Barack Obama wants to put a 90 percent tax on high bonuses from government companies. This is more than Joop den Uyl ever dared to.

* Netherlands literally means “low lands.”