The first lesson of Economics 300 is that the economic incidence of a tax is independent of the legal incidence. So who will pay a tax on banker bonuses?
Not the bankers, evidently. Here’s the skinny:
“The tax is going to be 90 per cent absorbed by the banks,” said one senior recruitment consultant with clients in the City.
In many cases that will mean banks doubling bonus pools, with the cost of the tax borne by shareholders. Dividends, already under pressure as regulators force banks to retain earnings to boost capital, are likely to be hit, bankers concede. tax?
Seems like a reasonably good question for coin-toss Tuesday.