What are they doing about it? Letting people know they will walk, that’s what!
Those of us in London IB just got shafted by way of a new supertax on banking bonuses, announced yesterday and effective through April 5 2010 (just to nail this
bonus cycle). Banks (including UK subs of internationals) will pay a 50% tax on the bonus pool *before* the bonus is even paid out; individuals are then subject to the normal 41% or 51% tax (depending on tax bracket). So effectively we’ll receive 25% of our pool. It’s intended as a bonus payment deterrent rather than a revenue generator, and is just Labour pandering to voters ahead of the election. Unfortunately, nobody wanted to stand up and defend bankers’ bonuses,
so it’s gone through.
This is major news here; everybody (even my group head) is talking about either moving to hedge funds, boutiques or buy-side (which aren’t subject to the supertax), or relocating to Zurich, NY or HK. Even if it’s only a one-year tax as currently drafted, people have lost faith in the UK political leadership. The long-term future of the UK is at risk and nobody seems to give a shit as they’re too busy trying to punish bankers for our supposed misdeeds.
Wow, that guy really knows how to tug at the heartstrings. I’m getting all misty.
-Taxpayer
Oh gimme a break. All that’s going to happen is a few of these clowns will actually jump ship – think Jerry and George and the dual wedding scenario. Prepare for awkwardness as the Georges confront the Jerrys and the Jerrys go back to business like it was 2007.
I’m getting all weepy-eyed thinking about those London bankers not getting their usual fat bonus.
bonus payments will be delayed until april 6 and will be paid with a 25% premium to make up for the delay
F the Bloody Brits. So a little less money for hookers and blow this year. Just take a longer trip to Thailand this year, and get the 3 for 1 special.
-PJ
Yikes, they’ll have to lose 20lbs for every 1% reduction in pay…London bankers may end up looking like an army of Christian Bale’s from ‘The Machinist’…emaciated bodies and bank accounts is the new killing it!
Yeah, come on over to New York: plenty of jobs for everyone. You want fries with that?
bonus payments will be delayed until april 6 and will be paid with a 25% premium to make up for the delay
ping jiang@5 since when do you pay for your pussydick?
bonus payments will be delayed until april 6 and will be paid with a 25% premium to make up for the delay
Welcome to NYC, where taxes are low!
“is talking about either moving to hedge funds, boutiques or buy-side”
Because there SO MANY jobs on the buyside…riiigghhhttt
I’d much rather work at a hedge fund than at a buy-side shop. -Former LEH quant
RBS sucks
Tax is not high enough. None of these twats deserve anything this year.
i think we should tax all bank bonuses at 50% in the US too (except hedge fund or private outfits which don’t depend on cheap govt funding) for 2009!
http://www.youtube.com/watch?v=1YH2gIhYvPc&NR=1
Who let the populists onto this thread? Jesus fucking Christ.
exactly what qualifies as a bank? does this mean employees at the equivalent of our local commerce bank would have to pay a tax on their bonus too? hmmmm….seems to me that this “tax” is casting the net a little to wide – call a spade a spade boys, it’s cruel and unusual punishment.
@1,16,17 get back to your gov’t retraining center and remember who is covering your unemployment check
Isn’t there a L25,000 threshold, too? Lil’ low, no? Could see maybe 100,000 or 250,000 but really, the 1st year and ops bonuses really doing damage for kids trying to pay off student loans puttin a hurt on? Please.
@19
I’m not a populist but a capitalist.
I have no problem with hedge funds or small agency trading/M&A shop racking up billions in bonuses as it is private capital and they did not require my tax dollars.
@19 I mean really?! In Soviet Russia thread writes you!
And I wonder if bonus payments will be delayed until april 6 and will be paid with a 25% premium to make up for the delay…
Does the tax cover payments-in-kind? For example a year’s subscription to the jelly-of-the-month club?
@23, I would agree with you but this also hurts any company labled as a ‘bank’ whether they took funds or not.
Boo hoo hooo. My $1 million bonus just got cut in half to $500k. My life is so hard.
Bankers need to drop this ridiculous sense of entitlement that they seem to have.
#23 hit it on the head.
Why do we need banks if the US govt. is guaranteeing them? The banks are like tits on a bull. If US is in the lending and guarantee business, then the banks should get cost plus 8% profit. Just like a utility.
Too bad the average American is a moron or we might get some real reform. The average financial institution is a socialist parasite in drag.
@2
I’ve seen her eat corn niblets, but she scooped them.
@26 – Examine your motives and the concept of the tragedy of the commons.
Hey All,
So as I’ve been watching all this anti-bank activity on the part of governments, what do you think the odds are that banks will return the favor and start exerting pressure against the government? Considering how much leverage many of these institution have over economic factors, isn’t there a risk of some kind of anti-currency/anti-economic backlash from the financial institutions? At the least, I would expect to see donations to political parties being cut off over this kind of thing… what more do you think might happen?
why tax EVERYONE at banks to punish the entire firm for the colossal f*ckups of maybe 5, 10% at most of the employees?
If the Gov’t/Taxpayers ever want to get their money back they should be hoping to god (or who/whatever) that the big producers stick around and keep producing, instead of stuffing down disincentive after disincentive to do so.
@21 – You are FTW. I recommend you try that line on the cop the next time you get pulled over on the Pulaski Skyway.
@27 – check your math b1tch, that number is $250k after tax (stay focused or STFU). if you’re an MD supporting a wife and 2 kids living in the uk – good luck (speculating as I’m a NYC’er). 2nd year associates numbnuts at jefferies are clearing more than that…
If all the firms in London begin doing God’s work, the spiritual satisfaction will more than offset this decrease in worldly, material compensation.
As when Jesus went to the Temple, so the PM and MPs in Britain have gone to “The City.”
@32 Anal… because that does not make good headlines. According to the media, everyone who works in finance is a ‘bankster.’
Trader=banker
Ops=Banker
IT=Banker
This is just a ploy to try and buy Labour a few votes. It does nothing to reduce the debt (they actually added more spending on top of it).
It is not only to punish RBS/Northern Rock etc, but to punish what the public views as bad.
How many people on this thread are actually bankers??? I mean seriously I work from 8am to 1 or 2am every day and expect that the compensation I EARN actually goes into my pocket
Would I move out of London to keep the other 50% of my compensation?….Damn Right!
Go back to your 9-5 and let the big boys talk
Call their bluff. Bankers are friggin useless POSs!!! Let’em eat cake!!!
Even boutiques aren’t hiring anymore, they’re fully staffed from picking up laid off bulge bracket bankers from the last few years. Hedge funds and buy-side? Forget it. Where do UK-based bankers expect to go?
@25 – Yes. And it applies to CAP award programs even before they have vested… it is the value of the award and not the value at the time of exercise.
@27 – you clearly are one of the American morons we hear so much about. The tax is 50% at the bank level, then there is a personal income tax of another 50%. So the banker who was awarded $1MM, is now getting $250K.
What people seem to fail to grasp is if the government can do this to one group, what is to prevent them from doing it to another group they later find to be offensive. It is a dangerous game to allow the government to punish the many for the sins of the few.
Net this is an inflationary tax that hurts shareholders and may force the quick sale of nonbanking units in the UK.
But perversely, it may stimulate employment in the real economy.
Now everybody has to restate numbers to reflect their tax liability?
May as well set aside a larger share of revs for comp while you’re at it.
Anal_yst @32 – Not only are your posts boring, you’re also clueless. I’m going to assume Analyst = 1-3 years out of school.
1. Performance-based pay is tied to the individual performance and the performance of the individual’s group and firm as a whole.
2. Bonuses are discretionary.
If your desk did poorly, but you did pretty well, would you go to your MD and tell him you deserve to get paid regardless of how the desk did? And that he should go to his boss and demand a larger slice of the pool?
These bankers need to STFU and sit down. They should be glad they have jobs at all. It’s the height of arrogance to be boo-hooing about reduced taxes when unemployment + underemployment rates throughout the West are in excess of 10%.
The banks were given trillions in lifelines to get in the business of lending again. Yet they still charge high rates for student loans and have done jack sh*t to engender good will from the public. Even the shareholders have become heated by the return to egregious bonus payments, as if the whole crisis in 2008 never happened.
And before anyone starts praising the Tories, remember that Thatcher’s government did the initial bonus tax on banks back in 1981. Cameron and his friends have been pretty silent about the current tax, too.
@tax chick – thanks for putting the seal of approval on my numbers.
@37 – I’m a banker and feel your pain. thankfully (or unfortunately), my comp is based on revenues I produce – not some range for my “class”
*about reduced bonuses
Not enough bad teeth jokes. I’m disappointed in all of you.
@38, you probably typed that while still unshowered and wondering what you are going to do with yourself today. Go stand in line for some government cheese.
@40 — I dont think you or any one else is doing any better there. On hand you compare 1M (which is before personal tax) to 250K (which is after personal tax!). The real comparison is 500K to 250K or 1M to 500K. So are a bigger moron than 27. At least he has the ratio right.
@42 That’s exactly what you should do.
@48 – wow, math PhD there. Figure it out – bank awards bonus of £1m, pays £500k to government and the other £500k to the employee. Then employee owes tax on the £500k he receives (only at 40% plus NI until after April 5th), so there goes another £200.5k. So net, he gets £299.5k (forgetting about the 17.5% VAT next year).
And not everyone receives huge bonuses, so stop whinging. Base salaries aren’t overly generous, so most people rely on bonuses to make a fair wage and £25k catches a lot of people (that includes IT and others). London is a very expensive place – at a bare minimum, think a small 2 bed apartment within 45 minute commute in a so-so area, and you are already talking more than £1500 a month in rent (over $2400). And that’s fairly basic, earned on a long work week. Not your 4-bed McMansion earned 9-5 on a job that only requires a 3-year college diploma.
The irony is that this doesn’t cover *guaranteed* bonus payments (which some could argue are the most egregious), as they are considered part of annual salary. So, the Andrew Halls of the world can sleep soundly knowing HM Treasury won’t touch their GBP 50,000,000 or whatever check, while the manager of the HSBC branch in Luton just got his GBP 40,000 cut in half.
Can we get a breast post now?
@1/@3:
Don’t get too excited. It will be a cold day in Hell before hack politicans are able to outsmart the industry. There are already strategies to get around this.
Like I read yesterday. Temininate the banker, give a severance, and then re-hire with a sign on bonus.
Bankers IQ>>> policians >MM
Back in the late ’70s-early ’80′s, pre-Thatcher, my old man worked for a British bank. The tax laws in those days were such that the City banks would try to avoid paying cash bonuses altogether– instead they were paid in kind. In 1979 his bonus was a BMW 528i + a years worth of gas, oil and maintenance, and a bunch of suits from a Savile Row tailor.
Back to the future?
@40/TC:
Precisely. It is for this very reason that I propose 50% tax rates on Tiger Woods and possibly all professional athletes.
I would also tax Hollywood entertainers at 50%.
Politicians would be taxed at a 75% rate, except Chris Dodd and Barney Frank, who would be taxed higher.
@37 So, working a million hours a week means you’re a big boy? I love these people who puff up their chest about how many hours they work. I roll into work around 8:15am, leave around 3pm when the market closes and guarantee I out earn most of your ilk.
Does this affect Barclays (Lehman) guys working in the US?
56 = Dick Fuld, circa May 2008
I would like to invite all distressed bankers to relocate to Monrovia, the financial capital of the future.
@57 – I think only if you pay your taxes to Inland Revenue.
@ 50 –
before — the person get a 1M bonus
*Normal tax ~40%) – 400K
Net = 600K
After — Person is 1M bonus
*newtax at souce = -500K
*normal income tax 40%= -200K
Net = 300K
Now exactly is your pay suddenly a quarter?
PS: i have no idea about VAT as i am from the US
@61:
I am an expert in public finance, domestic and international. The VAT refers to a type of whiskey, and in Europe, most nations impose a VAT tax. Their governments get most of their revenue from taxing VAT 69 whiskey.
@42
1. duh
2. also, duh.
Wtf would you do in that situation, bend over, grab your ankles, and take it up the rear like you were part of Ping Jiang’s “Intensive Training Program?”
Fucking rëtárds.
$10,000,201/50%=$500,126.94
$5,000.94/40%=$300.47
$319.28=one night in the rump room w/cab fair.
-Erin Callan
@57 of course it will impact US bankers. Do you really think Barclays is going to pay US bankers 50% more than UK bankers? This unfortunately will drag down the entire pool..very unfortunate for those across the pond. No way around this, just have to bite the bullet and wait for 2011.
@51 … if guaranteed bonus is considered a salary then the firm already has to pay taxes on > 500K USD. While it will not effect the person but the firm would have taken that into account.
That said it is stupid. People will get “creative” all over again. Pay themselves in different ways. And also most bonus numbers are for ego boosts and dick length comparisons than “feeding/raising the family” bullshit.
FUCK YOU, PAY ME!
PAULIE
[Wtf would you do in that situation, bend over, grab your ankles, and take it up the rear like you were part of Ping Jiang's "Intensive Training Program?"]
1-3 year confirmed I guess.
No – what you do is:
a. If you really are a badass and not some Excel-jocket doing what their MD asks for, you take 49′s advice
b. If the market for your skills is shot to hell right now or you just plain suck, you whine to all and sundry about the long hours you work and how you don’t deserve to pay for the other idiots in the system.
Based on your posts, congratulations on choosing (b) – optimal for you at this time.
@50 – My place in London is a ONE bedroom and I pay more than 1500 GBP a month. And that includes nothing…I should have just stayed in Chicago on the floor instead of quitting my job, trying to be a hero and get the “big banker” bonus in London.
@50 – My place in London is a ONE bedroom and I pay more than 1500 GBP a month. And that includes nothing…I should have just stayed in Chicago on the floor instead of quitting my job, trying to be a hero and get the “big banker” bonus in London.
I suck at life trades apparently.
@69
Thank you for agreeing with me.
Oh, and FWIW, while its near impossible to jump ship right now whether average or exceptional, so it’s option A for me (just like last year, sigh…)
and posting…
Trust me, your life trading skills could be worse…
@74 – Tell me about!
-T. Woods
the one thing this will end up doing is drive jobs to other centers. There will first be a mad scramble to find loopholes this year but people have now lost confidence in the UK government so slowly but surely the jobs will go elsewhere. If I were a leader of Switzerland I would be quite happy right now at the UK’s idiocy as I’m about to get a lot of highly paid financial services employees coming my way and fattening my country’s coffers. As usual the swiss win
I really don’t understand most of the anti-bonus comments on this thread.
I work at a boutique PE shop and I am rooting for IB bonuses to be as high as possible. Why would I be jealous that other people are getting paid well? That just gives me some amount of incremental negotiating leverage for my own bonus. Anyone making more than the “average” $40-50k salary should realize that after the bankers’ compensation is eliminated the gov/public may come after you next. The whole “they took my tax dollars, etc” agruement is very shortsighted and not selfserving for anyone in finance, in my opinion.
@77 – I completely agree. Further, where does the rabble think the bonus pool is going to go if the banks don’t pay it?! I can tell you with certainty, it’s not going back into the general economy. The government has these banks in a vice grip and they want to bulk up their balance sheets. At least if the bonuses are paid, the drug dealers and prosties will get that money back into the economy.
I grow so weary of the populist outrage. You win. My bonus was slashed. Now take your locust like behavior elsewhere.
@37 Does your job description including monitoring and commenting on DB during those hours that you feel so entitled to be paid for?
@79 – Yes. Now go cash your unemployment check at my bank so I can continue to rape and pillage your paltry savings.
why work at Jefferies in London then?
@79:
I’ll let you in on a little secret. You see, I used to work on Wall Street, but I went rogue and moved to the sticks.
When these bankers punch in each morning at 9 am, they have to punch out on the BACK of their time cards for their two fifteen minute breaks. On the front for the hour lunch break.
They are posting these comments during their alloted breaks. At 5:15 pm every day, you’ll find them sitting in the bar at Harry’s, drinking dollar Buds and figuring out how much their pensions will be when they retire at half pay after 20 years.
the world needs ditch diggers too
@80. Nice. And you wonder why you’re fucking loathed. Ever consider doing something useful, like teaching school. Or hanging yourself?
@80. Nice. And you wonder why you and others like you are fucking loathed. Ever consider doing something beneficial, like teaching school? No? Then how about just hanging yourself?
@84 – Get a life. It was sarcasm. We all have a sob story one way or another. Life ain’t fair. If you loath us so much, why are you here?
Research.
@84:
Exactly. Join the NEA, and get with the program!
http://www.youtube.com/watch?v=_3mw49mk_x0
@85
Where do you think all the money comes from for the arts, higher education scholarships/construction/endowments/etc?
You don’t want banks paying bonuses, its gonna hurt other people/groups alot more than its gonna hurt most bankers.
@89/analyst:
Lets not let the Union Chief know the tax incidence, by income bracket.
You know, the IRS data which shows that the top 5% of income earners account for roughly 50% of federal income tax revenues, and that the top 50% account for about 95%.
It kind of ruins the silly, uninformed, populist outrage. Personally, I hope that many, many more people become rich, so that finances improve at the federal, state, and local levels.
He probably believes that Obama is “creating” jobs, too.
The government shouldn’t be in the business of creating jobs. If the private sector had all along been behaving rationally, rather than taking advantage of every possible loophole given to them by their craven enablers in Washington, maybe we wouldn’t be where we are now. I hope you never have to be on the short end of the policies you advocate, because then you’d see exactly how indefensible and inhumane they are, you smug cocksucker.
@89, want a bonus? Great. Fantastic. That’s not the point. The point is the absolutely obscene amount being paid. Wildly disproportionate and unjustifiable. So just spare me the hand-wringing about how tough it is to make it on 250K. You lack proportion, Scooter.
If your bank pays 50% tax on the bonus it pays you, your end bonus is 2/3, not 1/2 of what it was going to be:
before: 100K you/ 0 gov’t
now: 66K you/33 gov’t (66*50%=33)
also since its a 1-time thing its pretty much unavoidable but you can tell every BSD in the square mile is looking to the West End, HK and Switzerland and will twice if/when the opportunity presents itself.
@92
I don’t know what you make in a year but I am guessing you: A) don’t think that it is a wildly unjustifiable amount and B) wouldn’t like having to live on 50% of whatever it is, even though you could.
Obviously it is possible for a person to stay alive on much, much less than $250k, but that’s not the point. What gives you the right to say what someone else makes is excessive and what you make is justified? The odds are that if you are on this board, you make more than most other people in the world. Someone making minimum wage might think that you don’t deserve what you are paid.
Your arguement completely lacks perspective.
@93 – wrong
If your old bonus was $100k and the bank has to pay a 50% tax to the gov, now they only have $50k to pay you. It looks like you are also assuming a 50% personal tax rate, so:
before: $100k bank/$0 gov
after new tax: $50k bank/$50k gov
then: $25k you/$75k gov ($50k onetime tax + $25 from income tax (50%*$50k) = $75k)
On the contrary, it’s your own weak attempt at the justification of greed which lacks perspective. This is quite typical, though unfortunate.
@96, 94 here. Why is it greedy to make $500k but not greedy for you to collect your paycheck? That doesn’t make any sense, it’s based on your opinion of how much money a person ought to have and nothing else. That is certainly not a broad perspective.
@95
I am not touching personal tax rate. That remains unchanged so outside the calculation of the effect of the surprise tax.
if the bank gives you 50 and the gov’t 50 its effectively paying 100% tax rate on the bonus pool. My reading of their report says “50% of the total bonus pool” so I can only assume this is 50% of what they will pay, not 50% of what they were theoretically intending to pay. In this scenario of the original 100K bonus 1/3 goes to the BOE and 2/3 to the individual. Of course a different reading is possible.
banks will adjust global bonus pools, maybe do some accounting trickery.
Interesting question is why so few high profile bankers have spoken out against this?
@93 & 98 You guys, did we work together?
-another former Lehman quant
So do we start taxing hollywood actors whose movies bomb (studios always get local/state subsidies) or sports players that sub perform (same for tax payer assisted stadiums), entertainers, politicians? There are a whole host of potentially undeserving people of huge salaries, why not also target them? If my bank makes a huge profit why should I the employee not share in the profit? Why should shareholder rape the sweat of the workers. I guess if bankers were considered to be human the unions would see that hippocracy.
so the ways around this tax I would imagine are:
- Pay bonus in April
- Raise salaries (yea!)
- Pay in restricted stock…not sure how this tax works if paid in stock requiring vesting period beyond April 5 and then use the “bonus pool” to buy back shares to restrict the dilution.
If not senior UK guys quit and move to Switzerland. Or the industry wilts away as new talent/capital avoid the UK. New York, Switzerland, Hong Kong, Mumbai and Tokyo say thank you. UK tax base gets further hollowed out.
Anybody ever watch the staff in most investment banks? Heavy amount of foreign talent who would not hesitate to skip the UK for another locale. Soon UK will become more of the irrelevant rock that it is
after the announcement, let go of my British trainer and the Brit cleaner….Also will refuse to hire Brits from now on (cabs, clubs, private healthcare) & will only go shopping for anything other than bare necessities when I go to US (where things are cheaper, better & the service people don’t act like you are lucky to be buying something from them). I figure the UK gov’t can use my tax £ to stimulate employment themselves- for now, I’m using the piddly amount I have left to pay my exhorbitant rent…..
Everyone: Nut up or shut up.
Leave. If you are good at your job (and thus deserve your bonus), then you should not have too much trouble relocating.
Good bye London. Taking my tax payments and support of local businesses elsewhere.
There is financial knowhow in the City. Some of it (the ones not quite talented enough to get better deals elsewhere) will remain.
Prediction: as time goes back, London will become the global backoffice, reconciling trades, consolidating data, etc.
A #97/100- When a Hollywood movie tanks it doesn’t punch a hole in the fabric of the motherfucking universe. Athletes are fired or traded when their performance slumps. But when your cocksucking heroes on Wall St. abrogate their responsibilities and collapse an economic system they should be rewarded? Go fuck yourselves. Twice. Your fucking arguments are so embarrassingly simplistic, not to mention stupid. And your parents spent all that money sending your dull asses to B school? Is this what they teach now, how to sound like a fox News asshole?
105,
Why are you here? And furthermore, can you answer this question, posed by 94: “Someone making minimum wage might think that you don’t deserve what you are paid?”
Your logic is completely subjective, and noticeably parallel with your lack of self-worth. Your parents divorced 15 years ago. Get over it.
And with that, Scooter, you’ve just evidenced why you are a lowly assistant.
107,
Oh, burn! Good one. However, why don’t you focus on the question at hand, and think of the subjectivity regarding what’s too much and what’s too little?
@ 108-
By being so deliriously insistent upon subjectivity, you expose yourself trying real hard to obviate the need for any and all standards, restrictions and governance. The only objective standard being how full your pockets be.
Now, we could discuss the accumulation of wealth as a relative or absolute need, and consumption as competitive and conspicuous, and the potential for damage to shared values, but I’d be wasting my time. You and the other cogs here don’t care. Plus, you’re too easy. No challenge at all.
This has been amusing, but I have a very great deal of digital content that needs to be edited. So I’ll leave you to your cages, your reconciling, your CFD’s, or whatever the fuck you do all day to earn that big fat bonus that tents your pants.
For fuck’s sake!
In the time you morons took to calculate the % of your bonus cut, I moved to Singapore. Screw you guys!
Ok…