Global bank tax?

Some non-US bureaucrats are starting to think that a global tax on bankers would be a dandy thing to enact!

"Gordon Brown said on Wednesday the world’s leading economies were close to agreeing a global bank tax, amid hopes in Downing Street that a deal can be concluded at the G20 summit in Canada in June.

Mr Brown believes that opinion has shifted decisively in favour of a globally co-ordinated tax after President Barack Obama’s move last month to raise $90bn (£57.7bn) from a US bank levy."

Sorry, but I'm going to have to call Mr. Brown's bluff and say that there is NO emerging international consensus that such a tax can be imposed any time soon.

In fact, I would presume that such a tax would fall largely on US banks. This entire issue is a non-starter until some serious Constitutional issues are resolved, chief among them is whether income that is earned strictly within the US can be subjected to a non-US income tax, even if our Dear Reader or Congress says "yeah, that's fine, we'll sign that deal".

To wit, let's take a look at the 16th Amendment:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

It does not take a Constitutional scholar to notice that nowhere in the 16th Amendment does it authorize Congress to "lay and collect" a tax on behalf of a foreign power.

So while politicians of a particular stripe may really like the idea of enacting a new tax, the fact is that this particular one is going nowhere, at least here in the US.