INVESTMENT BANK Goldman Sachs has U-turned on plans to deliver staff bonuses after April, following a furious reaction from MPs.
The proposal would have seen bankers take advantage of a drop in the top income tax rate to 45p from 50p on 6 April. However, a barrage of criticism from various MPs and the governor of the Bank of England Sir Mervyn King prompted the Wall Street bank to reconsider, reports the Financial Times.
Sir Mervyn said: “I find it a bit depressing that people who earn so much find it to be even more exciting to adjust their payments to benefit from the tax rate, knowing that this must have an impact on the rest of society, which is suffering most from the consequences of the financial crisis.”
Public Accounts Committee chair Margaret Hodge yesterday said the 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.
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.
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The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform