Banker Levies...will they cross the pond?
I would like to get your opinions on something pretty simple but potentially far reaching. As most of our cockney monkeys are well aware, the British Treasury has been extremely active in the wake of the financial crisis. British banks suffered perhaps more than any and the result has been a hawkishness Adam Smith must be doing cartwheels over.
Today, the hammer came down. To the tune of £2.5 billion ($4 billion). That is this year's British bank levy, up a whopping £800 million from last year's head turning figure.
The Bank of England recently noted that the near-term outlook and resilience of the U.K. banking sector has improved. Markets also now have certainty over the timing and direction of regulatory change, with the Basel III regulatory reforms not being introduced until 2013 at the earliest.
In other words, we need to bag a few more bucks from you fools before pillaging becomes standard operating procedure.
My questions for the gallery:
1) Lots of you over-the-pond monkeys have told me you want more coverage, well here's your chance to rant about The City and how things are going. What's the pulse on your desk as a result of this news? Is Seville Row going to burn tonight? Will Thomas Pink be beaten down so hard he has to change his name to purple? How has the scene changed since the British Treasury became your de facto banker?
2) For the house...a more perplexing conundrum...
The U.S. is a common law country and has derived a huge chunk of its legal roots from U.K. soil. Banking has not been much different. America may be the big power, but in regulatory terms it has always taken a cue from England.
How long before an official tax levy comes to Wall Street?
How will it effect the industry, if such an event does occur?
There have been murmurs and whispers of some sizeable IPO activity in the works and the banking world (if nobody else) seems content to declare the crisis over.
Does this mean that the government will soon be coming for its pound of flesh in dollars?
More on the further implications of this story...tomorrow.
In terms of fiscal policy terms, the US didn't always take its cues from the UK. The UK has always been a little more left leaning than us, and the US shies away from being punitive on the tax front. (Windfall oil profits being an exception, but only because of a deal struck on deregulation)
I think there will be general tax hikes on the rich coming down the pike- across LTCG and Income. Perhaps some sort of windfall tax as well where if you earned $50K last year but $5 Million this year, we're going to tax you an additional 10%.
The world is raising taxes. Not just the US. And China will be forced to raise them, too. If we raise ordinary income taxes to 45% now, we can probably get away with keeping them low while Europe and China are forced to hike them to 55-60%.
It is Savile Row, pal. Seville is a city in Spain.
Conversation between business lobbyist and congressman goes as follows: "Hey man, show some love. If I don't get paid, then how can I pay you? This S*** in the news will blow over, just wait for the next big storm."
Not going to happen.
Think I much prefer a bank levy than rules/taxes on bonuses
Estate tax (aka death tax, 45% i think btw), income tax, tax on bonuses, tax on buying cars that have what now all of a sudden considered ungodly mileage, tax on trading profits, tax on offshore funds,.... >:O
The main advantage is the London timezone because it's between Europe hours and US hours. I think as Asia rises London's importance will fade with the burden of this new bank levy.
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