Let’s tax those Wall Street pigs. They’ll stay here and just pay right? Well, not so fast…
The populist vengeance aimed at Wall Street has brought on many policies that are grossly anti-capitalist, but the most egregious can be credit to our neighbor across the pond, the United Kingdom.
The U.K. has adopted a bonus tax, a heavy punitive measure aimed at bank executives in the UK, a whopping rate of 50%. It is time for Barney Frank to take notice, you cannot tax one group disproportionately, and vilify them, then assume they will stay around.
It clearly seems that JP Morgan is reconsidering its presence in London, just as any rational firm would do, in any country, if being punished and vilified constantly. For the past two months, reports The Telegraph, JPM has had plans to scrap or substantially scale back its Canary Warf development.
The signals are a bit mixed currently, and hopefully will become clearer in the coming months. Just last month the bank agreed to buy the 49.9% of Cazenove it didn’t own for $1 billion. At the time, Jes Staley, head of J.P. Morgan’s investment bank, said of the deal: “We look forward to continuing that successful partnership in a new era and to growing the businesses. We believe the wholly-owned structure will enable us to offer clients a seamless service in the U.K. and abroad.”
More likely than anything, JP Morgan and its fellow banking firms will adopt a wait and see attitude towards any seismic shift. If these tax rates are a one time occurrence, it is unlikely that the firm would choose to depart London. Though, if it appears that this is the new norm, then London’s existence as a banking hub may be in jeopardy. Eastern Europe, the Middle East, and of course, most of Asia, are vying to build banking super centers – and they’re not afraid to use tax cuts as bait to attract the firms, and the jobs that will come with them. The House of Dimon may just be the tip of the icerberg.
