The going rate for Goldman

Goldman Sachs sign Goldman has been bailed out by US taxpayers in the past

There seems to be a prevailing view that it is little short of scandalous that Goldman Sachs in the UK may defer the handing over of shares to its executives, so that they would be liable to next year's income tax rate of 45% on the payments rather than this year's 50% (see this morning's FT for more on this).

Given the size of Goldman's historic bonus pools, the value of these shares would certainly run to tens of millions of pounds, and probably to hundreds of millions of pounds, so the tax saving would not be trivial - perhaps double digit millions of pounds (Goldman won't confirm the quantum).

To be clear, what Goldman is considering in this case is not opaque and highly complex tax planning, designed to bamboozle the tax man. It is not sophisticated tax avoidance, or financial engineering of the sort - arguably - that too many banks and bankers have indulged in.

The global investment bank is contemplating delaying for a few weeks the handing over of shares to staff that they were awarded in 2009, 2010 and 2011 but have not received yet.

This kind of adjustment of payment schedules is neither unusual nor confined to bankers: it is being contemplated right now by all manner of businesses, big and small, as the top-rate income tax cut looms; if that weren't the case, then the basic rules of business behaviour would have been rewritten.

So the noise around Goldman raises two interesting questions.

First, do we now expect a higher standard of behaviour from banks than from other businesses, such as architects or law firms or those in private medicine?

That might be a reasonable expectation, given that big banks such as Goldman have been bailed out by taxpayers in the past and doubtless will be again (for all the current spate of reforms designed to cut them free).

If banks benefit from permanent state protection against collapse, then perhaps we need to make explicit that there is a contract between banks and state that they should never ever take steps to reduce their tax burden.

On the other hand, if Goldman is too big to fail, it is US taxpayers - rather than British ones - that are its main underwriters.

Second, is there a new rule of good corporate citizenship that any business or business person should pay the highest prevailing rate of tax possible, even if there is an easy and legal way of paying less tax?

Apparently when David Cameron had one of his regular meetings with business leaders on Friday, he told the assembled corporate eminences that they had a moral duty to ensure their companies paid the full corporation tax rate, given that the government has been cutting that rate and continues to do so.

According to one multinational boss, he was in essence saying that paying corporation tax is a part of a business's corporate social responsibility (CSR).

This carries two perhaps unfortunate implications.

First is that the prime minister appears to feel more or less powerless to use much more than moral suasion to ensure the biggest, most internationally mobile companies pay the going rate.

And if paying tax is part of CSR, then the public sector is being characterised - in essence - as a charitable good cause.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 103.

    JfH, 92. I can see human rights lawyers having fun with any attempt to prosecute under that. Really think it would work? Who else could it be applied to?

    Prude Boy, banks have a legitimate role in financing trade - and trade has made a huge contribution to the growth of wealth and improvement of living standards. Some bankers have done bad things, but not everything all banks do is bad or wrong.

  • rate this

    Comment number 102.

    This is what happens when you go after 'benefit cheats' with such zeal. Other cheats tend to get away with it while you are so busy chasing OAP's, school children, public sector workers, disabled etc etc...

  • rate this

    Comment number 101.

    Ref 97
    Does it really have to be this way?
    There must be some neutral Newspapers.Some neutral Journalists.
    If not....God help us...

  • rate this

    Comment number 100.

    Assuming that it can be 'fixed'. There are some significant differences between the two era that make the prognosis worse rather than better. As for will they wait - its pretty clear that many people want the bubble reinflated as quickly as possible and damn the long term consequences.

    Sometimes the public get exactly what they deserve

  • rate this

    Comment number 99.

    Overall it really is time to implement another of my pet schemes.

    The National Maximum Wage - as suggested by David Cameron.

    Lets see Goldmans avoid that one (or s.. o..)

    They are only here to get money from us - the people are the cash cow that pays them their bloated pay!

  • rate this

    Comment number 98.

    Buy a share in Goldman ,
    Go to the AGM
    Complain .

    All the BBC ate doing is attacking the bankers to support their pro labour agenda .
    Why not go after the footballers who pay far less than 45% tax ,
    Or the wealthy entertainers
    Or the wealthy popstars .
    Or the wealthy BBC employees .

    All different faces of the same coin .

  • rate this

    Comment number 97.


    As long as there are political parties, the press (not just politicians) will take up party lines. Parties are, by definition, bad for political plurality aka democracy.

  • rate this

    Comment number 96.

    Read up on all those investment enterprise schemes and you will get the idea. To say nothing of films.
    ~ ~ ~
    How do those affect the 75% of top tax rate taxpayers who are said to pay via PAYE?

  • rate this

    Comment number 95.

    89.The Itinerant ex-pat "an asset bubble is going to take a lot of fixing"

    Indeed it will.

    But one thing is crystal clear and that is this lot see (#93) haven't got the intestinal fortitude for the task!

    I return to my economic history theme of a study of fixing the last property bubble - which took all of the 25 years of the Long Depression (of 1870) - but will the people wait that long?

  • rate this

    Comment number 94.

    There are minor scandals and there are major scandals.
    But find it peculiar that certain newspapers are very quick to praise certain Political Parties and very slow to condemn certain Political Parties.
    As it ever dawned on such newspapers,that all Political Parties,would be wasting time trying to divide our country,if all members of the Third Estate,were really neutral?People are not stupid.

  • rate this

    Comment number 93.


    I think the 'anarchy' you imply is that of the establishment against the people.

    See #92

    But Voting in some group of fair minded and economically literate people that actually has a deeply engrained culture of service would be best.

    We have to divide the banking sycophants and apologists from the people's legislators.

  • rate this

    Comment number 92.


    A 'bill of attainder' allows Parliament to convict and sentence. It 'must be democratic as it passes through parliament!

    Usually used for treason and the like - today such as theft from the people or conniving against the people, perhaps! First one was in 1321 for the execution of Hugh le Despenser - all nice and legal and no trial required.

  • Comment number 91.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 90.

    First: "We will be raising the rate from 45% to 50% but not yet so get your bonuses in early"

    Next: "We will be lowering the rate from 50% to 45% but not yet so you can delay your bonuses"

    Finally: "Look we tried a higher rate but for some reason it didn't raise as much tax. See - there's no point in taxing the rich more"

    Moral of the story: no morals involved.

  • rate this

    Comment number 89.

    @70 JfH. I don't see austerity and ultra-loose monetary policy producing growth. I think the "grey suits" have it totally wrong. But household debt rising from £60Billion to £1.5Trillion in 30 years (approx. numbers) on the back of an asset bubble is going to take a lot of fixing too.

  • rate this

    Comment number 88.

    #79. JustKBO

    Banks are vast money converting entities, relying on their customers to trade with others and get on and do real work. Extractive industries, energy and the like.

    The banks sit pretty. Watching others do the work.
    For which the banks make huge profits.
    It is their system after all.
    But why should their minions expect bonuses when all they are doing is pushing paper to one another?

  • rate this

    Comment number 87.

    No we shouldn't get outraged. But we should get the banks sorted out; because of the damage they have done to our wealth - individually and nationally.

    I don't have a problem with (legally) avoiding paying a tax. I used to queue for petrol on budget day. I've used PEPs and ISAs.

    Outrage? No. As the Americans say - Don't get mad, get even!

  • rate this

    Comment number 86.

    9. NonLondonView
    "Time for some Starbucks people power I think.


    Are you seriously that naive? People who do business with GS are 100 per cent like minded re the tactics being discussed. I'm not saying they're right, but jeez, please don't think GS or their clients are close to paying more tax than they absolutely have to.

  • rate this

    Comment number 85.

    @63 Mr Right
    Avoidance is legal. Are you in the fortunate position to arrange your affairs to save via an ISA? That's tax avoidance! Everyone is at it. You are right!

    Except those who do not have surplus income to save ...

    [Unfortunately, rather a high number of our population.]

  • rate this

    Comment number 84.


    @45 treacle
    No grey area if it is correct that 75% pay via PAYE. Should have read my post more carefully!

    Read up on all those investment enterprise schemes and you will get the idea. To say nothing of films.


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