February 21, 2013

Limit how much of annual payments to a banker are tax-deductible expenses

Sir, at the end of the day, somewhere somehow, one bank customer is going to pay for what the banks pay in tax. And so, if you want real transparency, eliminate the taxes on banks, because whoever really ends up paying these should have his full tax representation.

The way you go at it in “Let the sun in on banks’ tax affairs”, February 21, and like so many others go at it, unnecessarily make the banks stand out as villains; and, the publication of “how profits and corporate profits are allocated across countries”, would also unnecessarily breed animosity between the citizens of the world.

But that said, if you cannot do anything about it, because politicians like taxing banks so that they can be lobbied by banks, then at least help to eliminate some distortions. For instance any payments in salaries plus bonuses to any individual banker that exceeds more than £300.000 per year should not be allowed as a tax deductable expense. That would help to cap those banker bonuses in a way that creates much less distortions than other proposals we have read.