This comment doesn\’t make it through moderation, here is something left at Ritchie\’s.
OK, so I\’ve gone and looked. 15% is way, way too high.
We have, for 2006, financial sector profits (not including the Federal Reserve Banks which make money from seignorage) of 414 billion against a GDP of 13,398. For 2008 we have 243 of GDP of 14,441.
This gives us, as a percentage of US GDP, financial sector profits of, at the peak of the cycle, some 3.1/3.2 % of GDP. As the crisis revealed itself, 1.7%.
Are financial sector profits as a %ge of GDP likely to be higher or lower in the US than other countries? Higher than some, certainly. Higher than most (except perhaps those with outsized in relation to domestic economies like the UK and Switzerland perhaps).
OK, so let\’s take that as being what the global level is, even though we are pretty sure it will be lower.
(And do also note that Richard is insistent that some of these profits are not \”real\”. They are reflections of not accounting for risk properly so Richard should be arguing that the \”real\” numbers are lower than this).
Hmm, so, if even on these generous estimates we translate US levels of profits across global GDP and we also accept that they\’re all real profits, not phantasmal, then global profits from the financial sector are, taking that percentage and the $69 billion figure for global GDP, umm……$2.2 trillion to $1.17 trillion.
Whichever of those figures we take as being representative (peak of the cycle or running into the downside of it) I would suggest that sucking $690 billion a year out in tax would indeed be a burden. Even that it might \”unduly burden\” financial sector companies.
Adding taxes amounting to 59% of profits ain\’t going to be something that people just don\’t notice.
My thanks to Chris Dillow for sourcing that document.