BoJo out on a limb over bankers’ bonus

Boris Johnson has spoken out against the bankers' bonus tax. Not only is he at odds with his own party and the Government, but also with leading economists.

Boris Johnson has spoken out against the bankers’ bonuses tax. Not only is he at odds with his own party and the Government, but also with leading economists.

The Evening Standard report today that the London mayor has written to the Treasury outlining his concerns. Johnson writes:

“I have already had numerous conversations with both UK and foreign banks who are quite seriously reconsidering their earlier decisions to locate, grow or remain in London…

“These short-sighted proposals could potentially and permanently damage the competitiveness of London as a financial centre by driving away the city’s unique cluster of highly skilled people, ideas and expertise.

But Simon Johnson, a British economist at Massachusets Institute of Technology – recently awarded the title of top public intellectual on the financial crisis by Prospect magazine – dismisses arguments like that used by Johnson on his Baseline Scenario blog:

“It’s unlikely that many good people will leave, but if they do move to smaller institutions that are not Too Big To Fail, that’s good for the rest of us.”

Simon Johnson is urging the US to adopt a “supertax on big bank bonuses” but is critical of the UK approach:

The supertax structure being implemented in the UK is definitely not the right model – these “taxes on bonuses” are being paid by the banks (i.e., their shareholders – meaning you, again) and not by the people receiving the bonuses.

Essentially, we need a steeply progressive windfall income tax – tied to the receipt of a particular form of income.  This is tricky to design right – but a lot of good lawyers can get cranking.

Boris Johnson has previously defied David Cameron on 50p tax.

9 Responses to “BoJo out on a limb over bankers’ bonus”

  1. Adam Bienkov

    RT @leftfootfwd: Boris Johnson is out on a limb on bankers' bonuses http://bit.ly/7Fvh4o

  2. Martin Johnston

    RT @leftfootfwd: Boris Johnson is out on a limb on bankers' bonuses http://bit.ly/7Fvh4o #reasonsnottovotetory

  3. lee james brown

    RT @leftfootfwd: Boris Johnson is out on a limb on bankers' bonuses http://bit.ly/7Fvh4o

  4. Guido Fawkes

    Leftie economist derides right-wing politician. SHOCK HORROR!

  5. harry

    can’t we have a windfall tax on the bankers?

    take 99% of any bonus awarded in the last 10 years by banks which have been saved by the taxpayer? then they might all have to sell their second homes in Oxfordshire and I can buy one.

  6. Progressive London

    RT @leftfootfwd: Boris Johnson is out on a limb on bankers' bonuses http://bit.ly/7Fvh4o

  7. Roger

    Good to see LFF has discovered Simon Johnson – who as a leading figure at the IMF can hardly be dismissed as just another ‘leftie economist’.

  8. Tyler

    Worth remembering who paid, through their tax, for Labour’s big spending spree. Top 25% of all taxpayers pay 75% of all tax.

    By all means bash bankers and the like, but then don’t be surprised when they move abroad, and then don’t cry about having to pay more tax yourself or have services and benefits cut.

    ((and before you say they won’t move abroad, they already have started. Already seen several Hedge Funds move to Geneva, and some banking businesses due to start in London have been moved instrad to New York and Zurich. Well done Gordo)).

  9. Roger

    The notion that our banking sector will all relocate to some Swiss village is an absurdity – the rich require many other things than just money to sustain their fragile egos and lovely though Switzerland is they won’t find all of them out there.

    Worst of all who would they look down on?

    New York is another matter offering as it does all of the trappings of conspicuous consumption that they can’t live without – but I somehow can’t see our corporate Caesars willingly undergoing the regular rituals of humiliation that the American state now inflicts on foreigners willing to work and live there.

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