PLANS by Goldman Sachs executives to delay the delivery of bonuses until after April – when the top rate of tax falls – have drawn angry reactions from MPs.
The US investment bank was criticised by Westminster when it emerged bonuses could be delayed until after 6 April, when the top rate drops 50p to 45p. In all, ten banks were considering the move, but most have concluded it would be damaging, according to the Financial Times.
John Mann, a Labour member of the Treasury Select Committee, described the plans as an "opportunistic money grab", while Labour backbencher Chris Williamson said they are an inevitable consequence of the coalition's "inequitable" tax policies.
"The fact this represents a PR disaster for the likes of Goldman Sachs doesn't seem to bother them," he said. "No doubt these bankers feel their tax windfall will insulate them from public opprobrium."
Goldman took similar steps in the US when it paid out bonuses to its ten top executives on New Year's Eve, hours before Congress voted to raise taxes on America's wealthiest as the ‘fiscal cliff' deadline approached.
The investment bank paid out $65m (£39.9m) in restricted stock, narrowly avoiding the higher rate for those earning more than $400,000 per year. Such awards are usually made to the bank's executives in January, but the awards were disclosed in filings made public on New Year's Eve.
Public Accounts Committee chair Margaret Hodge said the latest move showed wealthy bankers "just don't give a toss about their collective responsibility", adding they are "the first to complain" if snow is not swept from the roads or if trains are delayed.
"They have a civic duty to pay their fair share," she said.
Take part in this week's Accountancy Age debate on tax avoidance by clicking here.
Is anybody surprised they would want to do this? I am sure even some of the MPs might have foreseen this if they'd had a good think!
Posted by: Gareth Ackroyd, 15 Jan 2013 | 18:17
Why would anyone not do some very simple tax planning so as to delay payments so that they are taxed at a lower level? The change in the top rate of income tax having been announced long in advance, it was foreseeable to parliament at the time the Finance Bill was debated that straightforward tax mitigation of this type would follow: if MP's didn't like it they could have pressed for in a change in the law over when employment income is taxable - as it stands, remuneration is taxable when it is paid, so anyone with any sense will pay such remuneration when it will be taxed as the lowest rate.
Posted by: Simon Gleaden, 16 Jan 2013 | 11:18
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