12/10/09 Baltimore, Maryland – “I can’t tell you how many people have called me from London asking to move,” an anynomous American banker was quoted in The Financial Times this morning. We mentioned this briefly yesterday, but more must be said… the “super tax” is really stirring the pot.
Long story short: The U.K. Treasury announced yesterday that they are imposing a 50% tax on any bonus in the banking sector over 25,000 pounds. As if it were not obvious already, an unnamed Treausry official told the press, “We hope it will be a disincentive for banks to pay bonuses.” The U.K. government expects to confiscate 550 million pounds, along with countless cries of vengefull approval from the mob — voters that policitians like Gordon Brown and Alistair Darling need now more than ever.
The latest word is that President Sarkozy is mulling the same “super tax” in France. “It is simply not acceptable for [taxpayers] to foot the bill for losses in a deep downturn, while institutions’ shareholders and employees enjoy all the gains as the economy recovers,” Sarkozy and Brown said in a tag team Op-Ed in yesterday’s Journal.
Oy… what would their mothers think? “Two wrongs don’t make a right” is what ours might say. We’re not sure how stealing from bankers (however “not acceptable” their compensation might be) makes up for fleecing taxpayers earlier this year. In both scenarios, the public grows poorer while “the man” has his pockets filled.
Interested parties in the U.S. should keep and eye on this, too… lest you think Mr. Peace Prize and his Pay Czar aren’t tempted to do the same.
Will Brown’s plan backfire? Ask this ol’ chap:
The Brits have soaked the rich before, most notably in the ’70s. What happened? The rich up and left, including Mick Jagger and the rest of the Rolling Stones. David Bowie, Bad Company and Pink Floyd famously became tax exiles soon after. These are rebellious, rock ’n’ roll icons… think a bunch of bean counting bankers won’t follow suit?
Ian Mathias
Ian Mathias is the managing editor of Agora Financial’s Income Franchise, where he writes and researches about retirement, dividend and fixed income investing. Much of his work is featured in The Daily Reckoning and Lifetime Income Report – Agora Financial’s flagship income investing advisory.
Previously, Ian managed The 5 Min. Forecast, a fun, fast-paced daily look into the future of global markets and macroeconomics. He’s also worked in public relations, where media outlets like Forbes, AP, Yahoo! and MSN Money have syndicated his writing. If he’s not at work, you’ll probably find Ian on a bicycle, racing up and down the “mountains” of Baltimore County. Ian has a BA from Loyola University in Maryland.
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More whining bankers…yawn. Does anyone really listen to them anymore. Like the credit crunch of the last 18months, those forecasters didn’t see that one coming. Maybe time they chose a different career.
The blackmail angle is getting old….fast.
Commentators should be asking – what’s the deal on this demographic shift in the UK’s pecking order? What does it tell me?
as someone who is genetically opposed to heavy taxation i certainly sympathize with the anti-tax crowd….however in this case it is just desserts….
the elite are the ones who advocated and led the way to the redistributionist socialist state….their ranks came from the fabian society at one point – a confab of wealthy and elitist types with whom many banksters would share much conviviality….
the banksters were stabilized and bailed out of their moral hazard by taxpayers both great and small….as such i feel absolutely no sympathy for the banksters regarding this tax….
i am sure the uk would do what the usa has already done – and that is make tax ex-patriation illegal. the totalitarian state stands tall – who can make war against it?
tax on, dude!!
Right on, Tony… a 110% confiscatory tax of everything. Better yet – a “reverse” debtor prison for errant banksters. Who would be opposed to it?
I propose a super tax on the *real* troublemakers – on the salaries and pensions of MPs and Congressweasels – the ones that ditched the laws that prohibited reckless lending.
Wait, no – politicians would never tax themselves.
How would they get there bonus if they left country? Or would the hole company leave? And who would cry?
It looks like just away to keep money flowing. Bail them out, then tax them to get some money back.