UK to Soak the Rich... Again

“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?

The Daily Reckoning