So, it’s clear when you study the facts that Andrew Hall should be paid the $98 million bucks that his contract calls for. It’s certainly awkward for the Obama folks and Citigroup that they need to pay this guy $98 million as the taxpayers pour bucks into Citigroup, so what is the solution?

It really isn’t that hard to figure out that the real problem here is the reagonomic tax structure with greatly reduced top tax rates that encourage an explosion of financial trading, hedging, financial instrument packaging and marketing that can be highly profitable. The problem at the end of the day is that it is very hard to identify a meaningful product from this “industry.” It is the ultimate bubble industry, creating market gyrations that allow savvy traders to hedge and corner commodities or their futures (all on electronic media, I bet Mr. Hall hasn’t had crude oil on his hands in his “work” in the energy sector) that at the end of the day creates impressive profits, but no tangible product that you can trade or use on Main Street.

The simple solution for this financial house of cards is to reinstate a steeply progressive tax rate such as this country had from the Eisenhower to Nixon era. The country did comparatively well in that era with the tax rates that have now been flattened.

It’s time to raise the tax rates. Mr. Hall should get his $98 million and the federal tax coffers should get about $70 million of it paid in federal taxes. That sounds harsh until you reflect on how difficult it would be to try to live on $28 million per year instead of $98 million. It would require some belt tightening, but I think it could be done.

[1] clipped from [2] topics.nytimes.com Andrew J. Hall is the head of Phibro, a small commodities trading firm owned by Citigroup. In August 2009, his $100 million contract made headlines, as the Treasury Department pondered the question of compensation for the top earners at banks still dependent on federal funds and Citigroup worried about a possible backlash. Citigroup is in an awkward spot, and it is hard to say which is worse: the inevitable public outcry if Mr. Hall is paid $100 million, or the risk that he might take his talents to a firm in which the public has no stake. The added wrinkle is that Mr. Hall works in a corner of the trading world that appears headed for its own infamy. Regulators are pushing to curb the role of traders like Mr. Hall, whose speculation in the energy markets may have played a major role in the recent gyrations of oil prices.   [3]