A government fee is imposed on those who directly benefit from the government service, such as a fishing fee to support restocking, a fee for using a toll-road, or an extra fire insurance fee to support the local fire-fighting service in higher-risk areas near forests. A government tax is imposed on everyone, or most, though the government service does not directly benefit the taxpayer.
Eminently sensible Robert Samuelson opines that President Obama’s tax on the financial industry benefits all taxpayers, who have had thrust on them the costs of bailing out excess risk-takers who themselves benefit in higher pay for taking higher risks. However, Samuelson misses the fact that the tax would land on the well-run firms, acting to reduce their “reward” for acting responsibly.
More sensible, and targeted, would be a high, even confiscatory fee imposed on those in specific firms receiving a taxpayer-bailout who in the current or previous year received salary and bonuses above, say, $1 million. That would make them think twice about reckless gambling and insufficient due diligence. It may not raise enough to offset billions of taxpayer funds spent to stabilize markets, but it won’t stifle markets or penalize the responsible firms, and will encourage more responsibility by targeting rather than blunderbussing.
