TEXT OF STORY
STEVE CHIOTAKIS: Last year’s tax on British bankers’ bonuses failed. The U.K.’s former finance minister, Alistair Darling, says as much — and he’s the one that came up with that idea. At a financial conference, Darling said the bonus tax didn’t curb excessive pay in the industry.
From London, reporter Christopher Werth says it
could signal international efforts to trim
bonus pay are hitting a roadblock.
CHRISTOPHER WERTH: The U.K.’s one-time, 50 percent tax was intended to curb the kind of big payouts many say led to the risky behavior that caused the financial crisis.
Jan Randolph watches the banking industry for IHS Global Insight.
JAN RANDOLPH: It seems that if you want to get at the root of the problem, you’re going to have to do much more than just provide an annual tax. And all it’s done is provide a little bit more revenue for the government. It hasn’t fundamentally changed incentives and behavior.
The British government raked in around $3 billion from the tax this year. But with continued public anger over bank bonuses, the former U.K. Treasury chief says other, more severe measures could be in store if banks don’t change their bonus culture.
For now that doesn’t seem to be happening. Credit Suisse gave out a round of surprise bonuses in London this week, and there’s speculation that investment banks in the U.S. may give out bonuses a month earlier this year — to avoid possible taxes being discussed in Congress.
In London, I’m Christopher Werth for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.