Wall Street Abandons Republicans -- Now Supports Higher Taxes on the Wealthy

Wall Street mavens may be coming around. Years after they decimated the economy, they are beginning to realize that they need to change not just the error of their ways, but also the way of their errors.
This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.

Mr. Nixon... has had his problems in this campaign. At one point even the Wall Street Journal was criticizing his tactics. That is like the Osservatore Romano criticizing the Pope. -- John F. Kennedy, 1960 campaign.

Wall Street mavens may be coming around. Years after they decimated the economy, they are beginning to realize that they need to change not just the error of their ways, but also the way of their errors.

Jamie Dimon, CEO of JPMorgan Chase, now supports increasing taxes on the wealthiest earners, including increasing capital gains and dividends' taxes. Same for Home Depot's Ken Langone.

...much of Wall Street is on-board with some of the tax changes Obama has been proposing. "I would tax dividends and interest income higher and capital gains," said Dimon. "Have a higher tax rate. If you said there'd be a certain percent rate for people making over a million dollars and a higher percent rate for people making over $10 million, no problem with me. I don't think people should be able to pass unlimited amounts on to their kids."

Even Home Depot founder and financier Ken Langone ("You bet I'm a fat cat," he told me proudly) isn't arguing for the status quo. "I would enthusiastically embrace a tax increase," he told me. "I'm more than willing to pay taxes. I'm saying, take the money and use it to lower the debt." New York Magazine

It is not just that they support it, they actually state that they understand it is necessary.

So, all of the whining and complaining that the president was not being "nice" enough to them (Blackstone Group's Steve Schwarzman even compared the president to nazis) has been shown to be exactly what we all thought -- pious, posturing poppycock.

I know, I know, I know... there must be some ulterior motive here.

There is.

Jamie Dimon let that cat out of the bag when he worried aloud that the financial sector should not be allowed to become "just a utility."

Dimon is concerned that banks return to the job of coalescing money, making loans, receiving interest on those loans; and, on the investment side, trade for others' accounts and advise clients on mergers, acquisitions and public offerings. Run well, those activities made banks decent income -- but, not nearly enough to support Dimon's huge bonuses.

But, that is all they should be.

In 2009, I addressed this ("Make Banking Boring, Again") in response to a comment at Davos by Cantor Fitzgerald CEO Howard Lutnik who was reacting to the general sentiment in the audience that reins needed to be tightened on bankers and banking.

Banking should be boring. Easy money is too addicting. And, to go cold turkey from that addiction is too painful for the rest of us. That is not theory. We are living it, daily.

It is nice to have Wall Street's support not only for the policy of raising taxes on the wealthy, but also for the rationale. Dimon even said there should be estate taxes.

But, it is, alas, incomplete. It is only the first step in a 4-step plan to rid themselves of their addiction.

Step-2: I am still awaiting my "thank you" from Jamie and his fellow travelers (engaging in the most blatant socialism in modern memory) for saving their rear-ends.

Step-3: Then, they need to cease-and-desist from lobbying Congress and the administration to repeal or soften the Dodd-Frank law.

Step-4: And then, they need to support a financial activities tax (FAT tax). At 0.5% on each financial transaction, it is estimated to raise between $100-300B annually. That is $1-3 Trillion over a decade. That "ain't hay." Think of it as a tax on negligibly productive activities such as super-fast trading. Think of it as some payback for saving their rear-ends (I'll relent on my "thank you" if they go for this). Think of it as money the country needs to run itself. Think of it as a debt reduction measure.

However they may think of it, Jamie and his fellow travelers will not have fully recovered until they take the final 3 steps of their 4-step recovery program. It is for their own good.

For now, however, Wall Street has abandoned the Republican brand, never to raise taxes on anything, anytime, under any circumstances, including inheritance (aka "death") taxes.

Popular in the Community