Goldman Sachs boss defends aborted plan to dodge tax on bonuses as being like shrewd house-selling

Lloyd Blankfein said he stood by the idea of delaying bonuses until the 50p top rate of tax had been cut to 45p

After public backlash bank dropped the plan earlier this month

Bank of England boss Sir Mervyn King condemned City's culture of greed



Goldman Sachs boss Lloyd Blankfein defended the idea of delaying bankers bonus payouts to avoid paying tax

The head of Goldman Sachs has defended an aborted plan to avoid millions of pounds in tax on bankers’ bonuses, comparing it to shrewd house-selling.

Lloyd Blankfein risked a fresh public backlash by saying he stood by the move to delay huge payouts until after the top rate of tax was cut from 50p to 45p.

The chief executive of the investment bank claimed opposition to the idea amounted to ‘criminalising every right-thinking person who organises his or her affairs in a sensible way’.

Two weeks ago Goldman Sachs was forced to abandon its plan to delay paying out bonuses to help bankers avoid the 50p tax rate.

Bank of England boss Sir Mervyn King branded the idea 'depressing' and accused bankers of mis-judging public anger at the damage caused by the financial crash.

The investment bank had considered waiting to award equity bonuses deferred from previous years, due to pay out this month, until after April 6.

It would have meant tax on the payouts would have been paid at the 45p rate instead of the 50p rate for high earners.

But at the eleventh how the bank's Comp Committee pulled the plug on the plan.

Unrepentant, Mr Blankfein insisted people should not be subjected to opprobrium for responding to incentives in the tax system.

A plan by Goldman Sachs to delay the payouts of deferred bonuses until after April 6 was dropped two weeks ago

‘We don't go out of our way to put our businesses in the most expensive jurisdictions. Do we go out of our way to put them in the least expensive? No, we think of quality, we think of standard of life, being able to attract and recruit,’ he told BBC Radio 4.

‘If all of a sudden, in addition to the rules that generate certainty for people, the signposts become so amorphous and so loose and so subject to second-guessing, you're making everything uncertain and it's very hard to organise your affairs in a sensible way.

Bank of England chief Sir Mervyn King said bankers had to realise they 'can't just exist on their own'

‘I'm not saying that you are exculpated from any pressure merely because you meet the rule of law - we've never said that, we don't live that life.

‘But I would say are you going to hold people up to public opprobrium because a house they could have sold in January instead they sell in May because there was a profit to be made on that house because the selling price was higher than the purchase price?

‘If you do that, you are going to criminalise every right-thinking person who organises his or her affairs in a sensible way.

‘We are a public entity, we live on the goodwill of the public, and so we adapted to what we perceived as criticism. We stand by our original idea and we stand by the revision of our plans.’

When news of the plan to delay bonuses first emerged, outgoing Bank of England government Sir Mervyn launched a devastating attack on attitudes in the City.

He accused the super-rich of thinking it was 'exciting' to use a loophole which could cost the taxpayer millions.

'I find it a bit depressing that people who earn so much seem to think it's even more exciting to kind of adjust the timing of it to get the benefit of a lower tax rate which they will benefit from in the long run to a very great extent,' he told the Treasury Select Committee.

Sir Mervyn, who will stand down as Bank of England Governor in June, said City firms had to consider the reputational damage the move would cause.