50% tax on bank bonuses...

[SeanMacGabhann]

so if the banks are rewarding the people who worked hard and didn't cause or take part in the activities which resulted in the meltdown, the pot of money should go to these guys and not the higher earners

[legalbeagle]

The tax is a really foolish idea, and was brought in against the wishes of the treasury, as a political gesture. It will not raise any additional money. It applies to a bonus over ?25k. So for those "due" a bonus over ?25k, you simply pay ?25k as a bonus and pay the rest as a salary rise, making clear in your offer letter that you reserve the right to reduce the salary next year depending on tax legislation at the time. Job done. Yes the salary increase is taxed, but only at levels that the bonus would have been taxed at last year. So no difference there to the Treasury at all.

Or am I missing something?

If you want to get taxpayers money back, you put a levy on the banks each year as they have in the US, and make that levy a percentage of the banks profits, before any money is made available for bonus pools, or indeed anything else. That way it can't be wriggled out of. The ONLY problem with this approach is that it doesn't have the headline grabbing "we've put huge taxes on greedy bankers" benefit.

Don't be fooled. This is a really silly waste of time and effort, and it won't get you any of your money back.

And no I'm not a banker. Nor have I ever been. And nor is or has Mr Beagle. And I am a tax payer. A very cross one!

[????]

news

[legalbeagle]

I'm not sure how the Goldman actions help the taxpayer though. If they don't have a big bonus pool, they won't have to pay the huge tax bill, so the taxpayer gets no money back. Goldman just keeps the profits (which are significant this year) and spends it on something else! How does this get me my money back?!

[Ladymuck]

???? Wrote:

-------------------------------------------------------

> news

"It equates to an average of ?335,000 for every worker".

Hardly chicken feed.

[????]

Who said it was LadyM - but in overall terms it's just a small drop, people will go, companies will go and it sends out a message that London isn't a place for wealth generators....in the long run that will effect us all.

Sean - your place not stuffed full of people who weren't born here? Owe nothing to this country in terms of health and education? I'd be surprised if they were all raised here....."Haey we're imposing an additional new tax on your bonus from the British Govt...hey, I've always liked the look of Geneva" - who are targeteing our Investment Banking companies overtly. Plenty of people who earn huge bonuses can demontrate massive individual profits on their individual trading records they are not all culpable by any means so ypour low earners thing I just don't get. Seriously, Let's impose a 50% additional tax on anyone whose made a profit on their escalated house price greed and speculation in the housing market is just as much to blame.

Sean, though you work for one you're not a banker are you mate? And most don't share your well meaning altruism. You should know that many bankers are greedy, resent tax, have very little altruism and will potentially go abroad as will theire companies and people looking to enter investment banking or international finance will think London is anti it as a result. We, all of us, have benefited from this sector for years, without it there will be a huge gap in revenues, a massive CA defeceit, a collapse in housing market, increased unemployment, especially in London. This is at risk for a purely political tax to get the herd to go 'yah boo bankers' and it works....as this thread tends to demonstrate, London will be absolutely buggered if it loses its position as a major international finance centre and this takes that risk.

Crap tax, wrong message, risks harming our economy and all of us. Don't have to be keen on bankers to see that.

P

[Ladymuck]

???? Wrote:

-------------------------------------------------------

> Who said it was LadyM...

merely thinking aloud Quids...

companies will

> go and it sends out a message that London isn't a

> place for wealth generators....in the long run

> that will effect us all.

As far as I understand the situation this tax is to remain effective for one year only. Have I completely misunderstood the situation? Given this (assuming I have understood correctly) I find it hard to believe that this is going to lead to a mass exodus abroad by the banks. Indeed, I cannot help but feel that the CEOs of the affected banks are scaremongering in this regard.

[brum]

I don't agree with the tax, but I don't think all this fuss about bonuses serves just political motives. There is an underlying feeling of resentment that the banks continue to dole out big bonuses to staff who are already paid well to do a job. Its a cultural thing, a bit like the expectation to give a tip at a restaurant even thought the food and service was ordinary. The idea that we'll find the City deserted because the staff aren't paid big bonuses is ridiculous - its just scaremongering by the banks as LM points out. There'll always be someone willing to step in.

[tomchance]

I think you need to look at the evidence, ????, before running off those slightly tired arguments.

Will bankers all flee? What might the signs be, besides some whingeing supported by a Mayor who funded his election campaign with their money? Well office rents in those areas of London have been rising sharply due to demand, the Telegraph reported an anticipated growth of 100,000 jobs in the sector over the next ten years, and the Mayor is still planning for major growth in the sector. So clearly not an exodus, although of course there will be a number of footloose people who leave, just as many more come. Are we really this down on London as a place to live and do business?

Are we unfairly attacking them? Well first, much tougher regulation and taxes are coming in the USA, and most of the rest of Europe is already better regulated than the UK. Second, the public bailout of banks will probably lose taxpayers more money than their entire tax contributions for the likely duration of the recession. The bankers should thank us for keeping them in business.

Is it the best thing to do? Clearly not as a lone, one-off measure. A government more concerned with developing a more fair and resilient economy would bring forward reforms to stabilise the system, break up the riskier banks, and work both internationally and with UK regulations to shift more of our money towards useful outcomes like investment in housing, SMES, etc. rather than in financial innovations that former Fed chairman Paul Volcker suggested probably don't add anything to the economy anyway. In the long term I'd prefer to lose a little tax revenue from that sector and see more affordable housing, rather than the cost of buying a home jumping twice as fast as incomes again.

Hmph!

[????]

Global finance is highly competitive and er global...it's about, er, horrible word but 'brand' London in that highly competitive market for the employees and big financial institutions and high value smaller businesses like Hedge funds. One year WILL push and has pushed some of the high value traders and funds away and they won't come back once they've moved. Either we have a share of this 'obscenity' or we don't but without it we'll be significantly poorer - country, government individuals.Fine if that's what we want...

[Mick Mac]

SeanMacGabhann Wrote:

-------------------------------------------------------

> is that a serious point dirtybox?

>

> Let's say everyone on less than 25k "got a job" in

> the city in some strange world where that is

> possible. Would those city salaries still be ?50k?

> course not

>

> Besides who is now doing the cleaning, the

> assisting, the caring and all the other menial

> rubbish jobs which are needed for society to

> function

There are lots of people in the city earning less than ?50k - half our accounts department for starters and every secretary. That accounts for about half our staff.

I'd suggest that is representative of many city organisations. For every one earning millions, there are many supporting the organisation and earning below average London salaries.

[tonyw3]

???? Wrote:

-------------------------------------------------------

> Global finance is highly competitive and er

> global...it's about, er, horrible word but 'brand'

> London in that highly competitive market for the

> employees and big financial institutions and high

> value smaller businesses like Hedge funds. One

> year WILL push and has pushed some of the high

> value traders and funds away and they won't come

> back once they've moved. Either we have a share of

> this 'obscenity' or we don't but without it we'll

> be significantly poorer - country, government

> individuals.Fine if that's what we want...

With a name like ???? I'm wondering if you are a banker? ;-)

[????]

I suspect we'll make a profit on the 'bail out' of RBS and Lloyds/Halifax in time.

[????]

???? Wrote:

-------------------------------------------------------

> It's the "evil bankers" - and by the way I am not

> one - who have largely underpinned the massive

> expansion in public spending in the last 10 years

> (it's doubled in real terms...er pity that's not

> been matched in service) as well as much of

> London's economy. We can talk about the unfairness

> of it all and wether it is right to have an

> economy this inbalanced etc etc until the cows

> come home but in REAL LIFE how are we going to

> replace those tax receipts? and how do you think

> all the related jobs supported by the city

> directly such as legal/management consultancy,

> avccountncy. commercial property, surveying etc

> etc or indirectly - retail/restaurants, hey even

> art (not all bankers are philistines) are going to

> do if we discourage it? To keep levels of public

> spending even vaguely near to where they've been,

> we need a flourishing Financial Service sector

> including ludicrous hedgefund plonkers earning

> millions, sadly, the outlook of many people in the

> city doesn't tend to be to the greater good and

> their jobs are utterly transferaable

> internationally - until we rebalance our economy a

> tax that says bugger off rich people and won't

> really raise much at a potential risk to the most

> important tax raiser of the last 15 year or so

> just for the sake of politics looks stupid...but

> eh we're suckinh it to those terrible bankers.

>

> Now, if you argue that the current meltdown is

> all because of this madness and subsequent bubble,

> and it's a reasonable argument, then we better

> strip out the effect that it's had on our current

> situation and that includes personal wealth, our

> assets and the economy as a whole, governemnt

> spending - so it all will be reduced by about a

> third but at least we won't have the terrible city

> and those ghastly bankers...or chintzy little

> bistros, or cute knick knack shops, or skiing

> holidays...well any holidays abroad, but we'll all

> be morally better.

>

> Scapegoatery and hypocracy.....

again :))

[Ladymuck]

???? Wrote:

-------------------------------------------------------

> ???? Wrote:

> --------------------------------------------------

> -----

> > It's the "evil bankers" - and by the way I am

> not

> > one - who have largely underpinned the massive

> > expansion in public spending in the last 10

> years

> > (it's doubled in real terms...er pity that's

> not

> > been matched in service) as well as much of

> > London's economy. We can talk about the

> unfairness

> > of it all and wether it is right to have an

> > economy this inbalanced etc etc until the cows

> > come home but in REAL LIFE how are we going to

> > replace those tax receipts? and how do you

> think

> > all the related jobs supported by the city

> > directly such as legal/management consultancy,

> > avccountncy. commercial property, surveying etc

> > etc or indirectly - retail/restaurants, hey

> even

> > art (not all bankers are philistines) are going

> to

> > do if we discourage it? To keep levels of

> public

> > spending even vaguely near to where they've

> been,

> > we need a flourishing Financial Service sector

> > including ludicrous hedgefund plonkers earning

> > millions, sadly, the outlook of many people in

> the

> > city doesn't tend to be to the greater good and

> > their jobs are utterly transferaable

> > internationally - until we rebalance our economy

> a

> > tax that says bugger off rich people and won't

> > really raise much at a potential risk to the

> most

> > important tax raiser of the last 15 year or so

> > just for the sake of politics looks

> stupid...but

> > eh we're suckinh it to those terrible bankers.

> >

> > Now, if you argue that the current meltdown is

> > all because of this madness and subsequent

> bubble,

> > and it's a reasonable argument, then we better

> > strip out the effect that it's had on our

> current

> > situation and that includes personal wealth,

> our

> > assets and the economy as a whole, governemnt

> > spending - so it all will be reduced by about a

> > third but at least we won't have the terrible

> city

> > and those ghastly bankers...or chintzy little

> > bistros, or cute knick knack shops, or skiing

> > holidays...well any holidays abroad, but we'll

> all

> > be morally better.

> >

> > Scapegoatery and hypocracy.....

>

> again :))

*bursts out laughing*

Cheeky!!

[Ladymuck]

Oh dearie dearie me...

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6990689/Obama-tax-to-cost-UKs-biggest-banks-11bn.html

[Mick Mac]

???? Wrote:

-------------------------------------------------------

> I suspect we'll make a profit on the 'bail out' of

> RBS and Lloyds/Halifax in time.

We know Quids....we know. ;-)

[Ladymuck]

tomchance Wrote:

> Are we unfairly attacking them?

Well of course many within the banking sector will feel aggrieved and will attempt to give us one sob story or another about how by unfairly banks and bankers in the UK are being hit by this tax. They will also attempt to scaremonger...as e.g. has HSBC boss Michael Geoghegan who claims, amongst other things, that the tax will damage the City of London.

But at the end of the day, had they not being so grossly negligent (or at the very least reckless) with regard to their lending and investment policies, we wouldn't be in this economic quagmire.

>The bankers

> should thank us for keeping them in business.

Indeed they should. Furthermore, it is quite proper that they should be penalised for the economic and financial destruction caused as a direct result of that negligence/recklessness. Unfortunately - as expressed by tomchance, I also believe this tax (albeit headline grabbing) can only sensibly be viewed as part of the solution to restoring our coffers to financial health. Moreover, I do not consider that it is sufficiently punitive, purely because many a competent accountant/lawyer will be able to find a legal way to either avoid it completely or to mitigate its impact. The penalty should hit where it hurts. If anything, I don't believe it will hurt hard enough.

[Jeremy]

???? Wrote:

-------------------------------------------------------

> I suspect we'll make a profit on the 'bail out' of RBS and Lloyds/Halifax in time.

It's certainly a possibility. But RBS will need to find a way to compensate their staff in line with the market, without causing mass hysteria...

[SeanMacGabhann]

always have to follow that market, no matter the consequences right?

[Jeremy]

RBS are in a tricky situation... they will probably have to come up with various schemes (stock/options, deferred bonus, various perks) to keep people happy-ish.

[SeanMacGabhann]

Maybe they should adopt a Wenger like, train em young and don't pay over the odds policy?

This idea that people who work in banks are irreplaceable is palpable nonsense. This idea that the talent was too great to lose demonstrably so

Why is all this stick-shaking, passive-aggressive bluff not being called.? Trust me, no-one wants to go and live in Geneva. Not even Genoese. Governments aroudn the world are looking at banks more carefully and the environment for laissez-faire, hands-off treatment of financial institutions is going away.

And it's nothing to do with thinking banks are "evil". I do wish quids would stop with that line of argument... The media and the public are enjoying a bit of Schadenfreude is all . Are these well paid people really not big enough to suck it up?

[????]

Well the Genoese probably don't as they're from Genoa Sean..

People are going to Geneva and it actually a very nice city - clean, pretty crime free a bit dull maybe but pretty near some great cities of europe and the alps of course. High flying traders, although not neccessarily nice or even worthy, are not easily replaceable, their skills maybe particularly 'unuseful'altruitically but they are sharp, intelligent and brave and live daily by their results (none of this makes them nice or worthy by the way)...makes me laugh that people think it's sooo easy. You, I most of us couldn't do it...sorry folks. But the point is as I've said this tax won't raise much, risks London's status and our economic health but the gallery love it...your normally pretty scornful of Daily Mail rabblerousing but seem well behind it on this one Sean. And yes they are the evil bankers, just look at some of the posts on here, generalisations etc - let alone the front pages of the Mail.

Structural reform - legislation - removal of the absolute freedoms the banks have operated in (given by the Democrats and Labour incidentally) all should be looked at..but a playing to the gallery tax to try and save Gordon's skin that risks the economy of our country...no thanks. It's like a punch & Judy show. BOO HISS Bankers. Unthought out crap swallowed by people who have thir own culpability in this mess and certainly by and large benefited from the cheap, easily available boom money, tax receipts, rising asset prices and probably false sense of affluence it all created.

[SeanMacGabhann]

I'm blaming the Genoese thing on my iphone

Yes geneva is lovely, I've been there many times for work and whilst it isn't crime free at all (someone tried to mug me once, something that has yet to happen in SE22) if I was told I had to relocate I wouldn't cry or anything. But it's dullness is well known and there will be no stampede

As for traders? well, their merits/otherwise have been discussed here many times. it does take a certain type of person for sure. But I'm not cut out for drug dealing either. You make a good point about their attributes but? they have weaknesses too. And it's not just them alone who lives or dies on their daily performances.

I agree with you too that the tax is, in itself, useless and plays to the gallery. But I disagree that it risks much. I know you are worried about it and I won't dissuade you of that but that's mere disagreeing. there are bigger risks in this world to worry about

the difference between Mail-type rabble rousing and this is.. well? the Mail picks on weak and easy targets who have little or no comeback. The banking situation however, whilst misrepresented across all media, is something that was borne out of the very system and ill-regulated environment that the banks fought HARD to achieve. So blowback is inevitable

And booing from the sidelines at the people who got us into this mess seems entirely appropriate. It won't achieve anything, and some will worry it carries risk but compared to politicians who get booed at every opportunity and never get to use the "but we need to attract talent" argument it's small beer

[Ladymuck]

???? Wrote:

-------------------------------------------------------

> People are going to Geneva and it actually a very

> nice city - clean, pretty crime free a bit dull

> maybe

You forgot to mention the (in)famous assisted suicide clinic...

*huge grin*

Edited to say: oops, just realised it's in Zurich....sorry...that'll teach me to be facetious

*crawls back to hobbit hole*