50% levy on bonuses above £25k

[susie100]

Suprised there is not a thread about this already (although I might have missed it)

Great vote winner, however I am really doubtful it will raise any significant revenue for the government as banks will simply raise basic salaries, turn their trading floors into hedge funds and re-employ people as consultants.

Crazy to be attacking the sector that provides 25% of tax revenues in my view (I am not a banker by the way!) but not applying to other financial institutions such as hedge funds or private equity firms or indeed other industries that pay people £££ such as consultancies. They all benefitted from cheap credit as much as the banks.

What does everyone else think?

Everyone else is paying, why shouldn't the bankers do their bit? There are plenty out of work as a result of the fiasco, plenty taking paycuts or facing redundancies, not knowing where the next meal is coming from. A tax on a bonus seems trivial in comparison

so do you think that everyone should have to start paying extra tax?

Taking the million£ bonus earners out of the equasion here, for the vast majority of bank employees, their "bonus" forms a large part of their actual salary. Many are on a low-ish salary but receive a "bonus" which is essentially a lump sum part of their salary. And for most it is written into their employment contracts.

So imagine if the government suddenly said "everyone has to pay for the downfall of the economy, therefore, we are going to put a 50% levvy on salaries over say £25k, to discourage employers from pay their staff decent salaries. There would be outcry and rightly so!

The reality is that people don't think this is a good idea because they think the banking directors should have to pay back what they lost, they like it because they see it as a punishment. But the thing is, not everyone has done wrong, and the employee at the bottom of the ladder doesn't deserve to be punished any more than you or I.

Everyone is going to have to pay extra tax, though, Wannabe. Thanks to those ever-so-clever dicks in financial services - traders, investment bankers, economists, uncle tom cobbleigh and all. Not Ms Jones at the branch at 21A High Street. But it's Ms Jones who suffers while the mega-bonuses earners who got us into this crisis waltz off with their pockets stuffed full of our money.

if this proposal to make banks pay 50% tax on any bonus over £25k actually worked, I'd be all in favour. Seems unlikely though, sadly.

It isn't only banks that have benefitted from the government shoring up the banks. If the banks had gone under they would have taken with them a huge and diverse range of businesses. The knock on effect to the country would have been huge. labour didn't shore up the banks because they love bankers. This focus on bankers is Labour spin - you are all being incredibly gullible. And the bailouts are only a loan - the country will be paid back WITH INTEREST AND PROFIT. And not all banks needed government assistance. Barclays, HSBC, Standard Chartered and all their associated companies remain totally privately owned. It's surely up to their shareholders if they want to pay their staff big fat bonuses.

What about the car industry being shored up by the government - why are we giving a £2K scrappage allowance to people who can afford to buy a brand new car?

I can't wait for Labour to leave office. It's only a matter of time now.

This is a joke, I work 16 hours a day paying 40% tax and now my bank is going to be charged a 50% levy which means the government take even more money.. Considering only a few Banks needed the government money it is not fair to hit all...I'm tied of the bash the banker press, without us the goverment would be significantly down on taxes, they are biting the hand that feeds them!!!

We have a massive 2007 mortgage. If things get too bad for us we will rent it out and move to Luxembourg. We will not subject ourselves to a punitive lifestyle if we don't have to. There is work around for people who get this sort of bonus. For a reason. If not in the UK we will miss cricket.

Everyone benefitted from the banks being bailed out Edam, even you. And absolutely Ms Jones on the High Street - she kept her job didn't she? If her bank had gone under, she'd have been out on her ear too.

As for your desire to see everyone in a pinstrip suit emigrate - did you know that 0.1% of the population contributes 17% of taxes? If they all go elsewhere with their salaries, you'll be topping that up.

But Riven those bankers will take their clients with them.

Imagine you are Mr Peter de la Bilionaire and you have had Mr Billy - Big- Balls banker as your contact at the bank for ten years. He and his team have made you squillions.
He then says he and his team are moving to Zurich and would you like to move with him?
What are you going to do with your money?
Give it to the shiney, new graduate who you've never met?
Nah.

I do think they should stop any industry who took a government handout from carrying forward losses.

I think it's completely and utterly ridiculous that they didn't do this tbh.

So some of these bigger banks (esp linked to US ones) who made huge losses and got government handouts will now not pay corporation tax for years as they carry forward the losses (i.e. are not paying their due back to the economy). That cannot be right and should have been stopped straight away.

I know it is very popular to think that bankers are a lot of useless feckers who monkeys graduates could replace but that is seriously wrong!

We will all be significantly worse off if we destroy the banking industry in this country.

Every single industry benefitted from the bail out and it is NOT just the banks that caused it. The government got drunk of cheap credit, so did consumers, we are all just as guilty.

I have have had the third call this week frmo a client who is moving the business to Zurich/HK/Monaco. They see this as the beginning of the end.

I also really sympathise with the guys working 16-20 hours a day in highly stressful situations who are not getting a bonus this year. You just cannot compare that to a £20k admin job.

'the rich don't appear to have morals'

Man, some people just don't get it.

Could you please name the UK's largest industries? Nope? That's because it is financial services. Without it, the country is pretty much screwed. There's no mining (because no one uses coal), no real manufacturing business to speak of ... nada. Financial services is it and the government is doing all it can to drive the producers of the country's main export out of the country.

And yes, banks that didn't receive direct money from the government or through TARP plans did benefit indirectly, but then so did everyone else. If AIG hadn't received (US) government funding, that not only would have affected the banking sector, but the insurance sector, the re-insurance sector. And then, if the insurers had gone down, who would have paid out for all the flood damage in places like Cumbria?

And this argument that "oh, any recent graduate can walk into the job and take over" is bollocks. There are so many different jobs in the bank. Yes, there are some which are relatively easy but others which aren't. For example, most of the people working in divisions like structured derivatives have Maths PhDs. In M&A, it takes years of hard graft to get anywhere, and the level of knowledge and experience of some of the senior bankers is phenomenal.

You don't have to care about the little people to rip the heart out of the economy by moving jobs overseas. The problem isn't that the bankers will go, it is that they will take the jobs with them.

It is already happening around here. I am an expat married to a banker, many of my friends are the same. In the last 6 months, 5 (couples with kids) have left for different countries. Husbands still doing the same jobs but doing it from somewhere cheaper. So no opening in the City for anyone cheaper, but that tax revenue/disposable income is gone. Haven't had anyone new turn up during that period (in expat circles there is usually a turnover, but this isn't that). The school DS goes to has lowered its fees in an effort to pull in some more people. I know that private schooling is contentious on the boards but there are people employed there, the teachers, the cleaners, the TAs, the sports teachers. Those fees are gone.

It is funny to laugh at the silly bankers and their BMWs and all that, but a walk down say Fulham Road shows you the effects of this sort of thing. I would say that maybe 30% of shops are empty, now yes some of them were frivolous and silly but there were people working there who now don't have jobs. There were electricians employed and plumbers etc. The money goes round and round. I had a gardener come yesterday to sort out our backyard (yeah yeah but it needed a chainsaw and I don't have one) and he was saying that he is in trouble. He certainly didn't cause the banking crisis but he is paying with the high earners going.

We are being moved back to Sydney in the summer (DH had to beg a little to be able to stay that long to allow DS to finish his school year). DH isn't changing jobs, he will be doing the same job from Sydney. But it is cheaper to move us there and pay him more (relatively) and fly him to Europe as needed.

I like London and I love the British but there does seem to be an element of the Government shooting itself in the foot here. It will probably work out OK. It is all really complicated and not as simple as "Tax the Bankers!".

I am not complaining, I have nothing to complain about, but as much as people like to mock high earners they do have a slot in the machine and without them it is going to cease up a bit.

'the rich don't appear to have morals'

Get a grip some of you. This is as low as saying 'the poor don't have morals'.

Of course some bankers have behaved badly but can we please, please, please stop assuming they are all immoral.

I know friends who are bankers who live very honourable lives, who give a ton of money to charity (and I mean a lot - not just a token amount, and I know they can afford to but equally they could blow it on a ridiculous car but don't).

They are not all greedy and ruthless.

Well, those wealthy people who stamp their feet and say 'I'm not paying any extra taxes, that's for the little people, I don't care if I'm working for the taxpayer' are making a moral statement. And the rest of us, whatever our income or assets, are entitled to judge them for that.

The tax on bankers is for show. Like so many have commented, there are numerous methods to avoid the tax.

But more importantly, what about the rise in National Insurance! As it's such a complicated tax, does anyone even know how much more they will be paying?

This is what will hit people hard rather than the Robin Hood tax.

Sneaky isn't it ilove? While everyone is cheering about taxing those big mean bankers they have pretty much slipped that one past.

Who is doing that edam? I don't know anyone personally who feels that way.

It works both ways Morloth.

We are currently expats and will be bringing a job and tax revenue back to the UK as a result of the Credit Crunch. Many expats in the oil industry are returning home but its not always at the cost of the UK!

a lot of soldiers earn £20,000 or less.

hardly an 'admin' job.

in fact, if these people had any touch on reality, they'd realise that are lots of jobs that pay £20,000 or less that are anything but desk/admin.

ffs.

I too love it when people use the "oh, any recent graduate can walk into the job and take over" as I know how difficult it can be. I'm just an accountant in the City and in City terms that's a relatively easy job to get into and succeed at. But I've seen so many people try and fail.

When I was in my training contract I started with about a hundred new grads all with top grades from top universities. At a conservative estimate, I'd say about a third didn't complete their training contract either because they couldn't pass the exams or couldn't hack the work (it's hard work and long hours).

After that, plenty of people fizzle out very quickly as they find that they're not capable of progressing. Banks are pretty ruthless and most will sack anyone they see as not performing. I have plenty of friends doing similar jobs to me at other firms and I know for a fact that the banks I've worked for give a lot less slack than non-financial sector firms.

As for the reasoning that people that people who move overseas are immoral, I think that thinking is flawed and most people will do the same if they could when facing these sorts of punitive tax rates. As I said before, my income has basically halved overnight because of this move. My husband and I seriously have to consider what's best for our family and moving abroad probably is it. We'd maintain the same income after tax, get a better standard of living, our children could go to better schools and I could give up work. Sadly it would appear to be a no brainer.

Riven, re: I don't really understand why the banks aren't paying back the Govt/taxpayer first before handing out bonuses?

The ability of a bank to make money depends on its ability to retain staff who can make the money. And it isn't trivial - a trader who is good at his job can single-handedly make £50m for the company. A good team on a desk can make double that.

The bonus pool this year is a fraction of the money owed to the government, but lets assume they pay it all back this year and none of the top traders get a bonus.

What on earth is to then stop those traders then leaving to go to another company which will pay bonuses as it doesn't have to pay government money first?

They will still have the same ability to make that £50m, but instead of it going to RBS and then back to the public purse, it will go to French shareholders or Swiss private investors

I know it has become very fashionable this week to crow 'let them resign and I hope the door doesn't slam their arse on the way out' but it is catastrophically short sighted to want to see successful traders hounded out of a company which owes money to the government.