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Goldman Sachs should have stuck to bonus delay, say readers

There is no reason for Goldman Sachs not to delay its bonuses to UK staff in order to take advantage of the drop in income tax, say Accountancy Age readers

24 Jan 2013 Accountancy Age

By Calum Fuller

Goldman Sachs

GOLDMAN SACHS should not have bowed to public pressure to pay bonuses to staff before the top rate of income tax drops from 50p to 45p in April.

Of the 113 readers polled, just 31% felt the investment bank made the correct decision, while the remaining 69% were of the opinion that there was no reason not to delay payment.

The proposal would have seen bankers take advantage of a drop in the top income tax rate to 45p from 50p on 6 April. However, a barrage of criticism from the public, various MPs and the governor of the Bank of England Sir Mervyn King prompted the Wall Street bank to reconsider.

Public Accounts Committee chair Margaret Hodge last said the move showed wealthy bankers "just don't give a toss about their collective responsibility", adding they are "the first to complain" if snow is not swept from the roads or if trains are delayed.

Goldman took similar steps in the US when it paid out bonuses to its ten top executives on New Year's Eve, hours before Congress voted to raise taxes on America's wealthiest as the ‘fiscal cliff' deadline approached.

The investment bank paid out $65m (£39.9m) in restricted stock, narrowly avoiding the higher rate for those earning more than $400,000 per year. Such awards are usually made to the bank's executives in January, but the awards were disclosed in filings made public on New Year's Eve.

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