UK bonus tax proposal: Three reasons it won't happen in US
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"The dire state of the public finances meant that there was little scope for the significant sweeteners that would normally be enacted ahead of a general election," writes Howard Archer, an economist with IHS Global Insight, in an analysis. "However, there are headline-grabbing policies taxing bankers and the rich, which the government hopes will obviously appeal to most voters but which in actual fact will raise relatively little extra revenue."Skip to next paragraph
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The tax is estimated to raise £550 million, which would go toward job creation and lowering Britain's national debt, which will reach £1.4 trillion in 2015.
3. Bankers oppose it
The howl of outrage from bankers focuses around two things.
First, they charge, it's unfair. One banker even raised the possibility of a lawsuit, claiming protection from the nited Kingdom's Human Rights Act. Taking 50 percent off of a multimillion pound bonus doesn't strike most as a human rights violation, but the claim is there.
Second, and echoed firmly in the US, is the argument that such a measure would force the banking elite to take up residence in other, tax-friendlier places.
"Viewed from abroad, those foreign banks which reward their UK staff with contractually-agreed bonuses are likely to be the hardest hit," Angela Knight, chief executive of the British Bankers' Association, told Reuters. "London may well look to them now like a significantly less attractive place to build a business."
Whether legions of bankers jump ship over a one-time tax will be determined in time, of course, but London as a hub of international commerce probably won't disappear because of it.