Raising Eyebrows

"So over the next 6 months, we have been undertaking extensive measures to ensure that key clients are reassured that banking with us is both safe and advantageous to rivals", so droned a Partner to me on Wednesday.

 
I was initially apprehensive when I got a meeting 'invitation' from him, wondering what somebody so senior wanted a one-to-one meeting with me about. As it turned out, it seemed to be to give him a chance to rehearse a speech he is giving to even more senior partners next week, and he wanted input from somebody nearer to the actual work.

It was a hugely boring meeting so I'll skip the detail, but suffice to say that I have been pulled onto an enormous drive to boost Hedge Fund confidence that trading with us won't risk their money in the event of bankruptcy by it getting locked up by administrators as happened with Lehman Brothers.  It's a huge waste of everybody's time, as in the event it won't actually provide any such guarantee - but hey, as long as we can show them 'proof' that it is in place, it reassures them.  

As he droned on, my eyes glazed over and then wandered over his shoulder to the trading floor beyond, and fell on one of the news screens. I squinted and couldn't help saying "ooh, does that say 50% tax rate in 2010?"

I might as well have slapped the Partner in the face for the reaction it had - he stopped his diatribe, turned to read the mid-Budget headline, paled, and then went increasingly pink. I had to keep a straight face as he went out to get a better look, and then came back for a rant as he calculated how much more tax he would now be paying a year. (He ended up confirming it would be £90,000 next year, which for those not so good at maths means he takes home a 'mere' £1.1m - presumably excluding bonuses given that is such an unknown for 2009).

I know, even a part of me had the same reaction: my heart bleeds you lucky, overpaid fat bastard. On the other hand, if we put aside wealth envy for one moment, his subsequent reaction proves the criticism of this move made by many in the press about the potentially limited (and negative impact) of this on the country.  He's a smart chap, and quickly starting mentioning having various income recategorised next year - no details, so I can only assume he means bonus-related and other asset income - and even rebasing to another office, since in theory it doesn't matter where he works from that perspective.

At a high level, people are either assets or liabilities to a country from an economic perspective. Are they net contributors like the Partner, who work hard and pay a lot in taxes, or at the other extreme are they like Karen Matthews, the benefit leech with 5+ children, who lives off the state and costs the country £100k+ each year in benefits?

It clearly makes no sense to incentivise high contributing wealth generators, both in the City and other key industries in which the UK currently has a competitive industry, to seek ways to avoid paying tax by setting it to a level perceived as unfair.  It didn't work in the 1970's and it won't work now.  The real problem is the relative rate, and at 50% over £150,000, this catapults us above all our main rivals, even quasi-socialist states such as France and Germany.

What is most depressing is that the budget seems to have been politically motivated above all, not what is in the best interests of the country.  It was always going to be a nightmare for Alistair Darling. Old Eyebrows finally had to admit that the government have completely and utterly fucked up the economy over the last decade.

I think we all know that our beloved, unelected leader shoulders 90% of the blame for the degree of pain the country is about to experience, and I put that down to the kind of mismanagement that would have anybody in the private sector fired. MP's expenses are another fine example of the double standards.  Still, I must admit that with my wedding to L being only 5 months away, and with my plan to launch the business this summer gaining momentum, I can't help feeling the same as the Partner - perhaps I will just relocate.  After all, blogging's a global game.