“The more things change, the more they stay the same“. Or, as the blog’s French-speaking readership might say, “plus ça change, plus c’est la même chose“.
When the blog started work in the chemical industry, in 1978, it was possible to pay up to 114% of one’s income as tax in the UK, if one was a very high earner. That regime was swept away by Margaret Thatcher after the 1979 election.
But now governments need to quickly increase their tax revenue. Thus the UK government has confirmed plans for a new 50% ‘super-tax’ on bank bonuses, in addition to the normal 40% top rate. Of course, it is described as a “one-off” tax. But then income tax itself was originally introduced as a “one off” tax in 1799 to pay for the UK’s war with France.
Bankers are already muttering about leaving to go somewhere else. But where? The list of countries in severe financial trouble as a result of the financial crisis is rising all the time – last week it was Dubai, then Greece on Monday, and now Spain is having ‘crisis’ cabinet meetings.
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Hi Paul,
It may be unfair, it may be illogical, but the mood on the street is that it was Bankers that got us into this mess and they haven’t got the good grace to see it.
Many bankers do a good job they lend capital that allows the chemical industry to expand and meet society’s needs.
But, the recent bubble that bankers created has forced governments into injecting billions into the banking system to keep it liquid. This failure forced countries into turning unsupportable bank debt into National Debt.
UK National Debt would be 47% of GDP without intervention in the banking crisis. Following the intervention it is 56.8% of GDP, that’s about a third of the level at the end of the second world war. That took 6 years to amass.
And what do non-bankers get for this investment? A bunch of people who got us into this mess, who earn considerably more than the national median wage and want to give themselves bonuses. It may not be true but it is the perception.
We’re all investors in banks now, like it or not… as Ogden Nash put it in one of his more prescient poems
MA, WHAT’S A BANKER? OR, HUSH, MY CHILD.
The North wind doth blow
And we shall have snow,
And what will the banker do then, poor thing?
Will he go to the barn
To keep himself warm,
And hide himself under his wing?
Is he on the spot, poor thing, poor thing?
Probably not, poor thing.
For when he is good,
He is not very good,
And when he is bad he is horrider,
And the chances are fair
He is taking the air
Beside a cabana in Florida,
But the wailing investor, mean thing, mean thing,
Disturbs his siesta, poor thing.