It's front-page news in today's online Financial Times: "Goldman Backs down on U.K. bonus delay." This is a big deal in the austerity-gripped country, which has spent a lot of time and effort of late moaning and groaning that big, bad multinationals aren't paying their fair share of corporate taxes, even though that's precisely what they're doing.
When blowhards attack
I wrote about this in-depth yesterday, but here was the issue in a nutshell: Word had gotten out that Goldman Sachs (GS +0.66%) was planning to defer paying out bonuses in its London office until after the end of the U.K.'s tax year, April 6, so it's employees would only pay 45% versus 50%.
Outrage ensued, with one member of Parliament threatening that if Goldman went through with its plan, it "shouldn't expect any government contracts." Sir Mervyn King, governor of the Bank of England, chimed in similarly, saying: "I find it a bit depressing that people who earn so much find it would be even more exciting to adjust their payouts to benefit from the tax rate."
If an eye offend thee, pluck it out
I find it a bit depressing that the governor of the Bank of England thinks it odd that people would adjust their payouts to benefit from the tax rate. Of course that's what people do. When I do my taxes, I try and find all the shelters and deductions I can. I can't imagine that Mervyn King doesn't do the same.
If the law is being followed, but the law isn't having its intended effect, then change the law. If a tax code isn't bringing in the kind of revenue a country needs, then fix the tax code -- don't blame people, or corporations, for trying to maximize their own personal positions.
What Goldman was planning to do was within the law. The same can be said for Starbucks, which was last year's national tax scapegoat in the U.K. This year -- for one brief, agonizing moment -- it was Goldman Sachs. At least it's over.
If the government hadn't jumped so happily on the Europe-wide austerity bandwagon, it wouldn't be in the cash-strapped position it is now. Regardless, CEO Lloyd Blankfein did what he had to do, here, as distasteful as it surely was. The City is still the City, and Goldman needs to be at least somewhat in good graces with the British government to compete globally.
