Goldman Sachs’ CEO Blankfein Hits Back at Davos Tax Speech

Goldman Sachs’ chief executive officer (CEO), Lloyd Blankfein, has issued a riposte to UK prime minister
David Cameron’s speech
at the World Economic Forum (WEF) in Davos, Switzerland, which criticised strategies adopted by multinational corporations (MNCs), such as
Starbucks
to avoid paying corporate tax.

Blankfein, who was also speaking at Davos, commented: “If people organise their affairs to take advantage of the tax regime it’s not bad behaviour. There is a saying in the US that it is not even a patriotic duty to maximise your tax liability.” He was also critical of proposals in France to raise taxes on the wealthiest. “Having a 75% marginal tax rate in France is not going to make people go there.”

Goldman Sachs’ CEO also referred to Cameron’s pledge last week to hold a
referendum
on the UK’s continued membership of the European Union (EU) by 2017 if his Conservative party wins the next election in just over two years’ time. He said that the UK’s competitiveness and its attraction as a financial centre would be harmed if the vote went against continued membership, although Cameron was right to have raised the issue.  “It is salutary that these issues are being discussed,” said Blankfein. “It just brings a simmering issue to the forefront. I regard that as healthy.”

Blankfein was also interviewed at Davos by the British Broadcasting Corporation (BBC), and was asked about the recent controversy triggered by reports that Goldman intended to delay bonus payments for 2009, 2010 and 2011 in the UK until after April 2013, when the top rate of income tax will be reduced from 50% to 45%. He agreed that the bank had to be sensitive to public opinion and confirmed that resulting negative publicity in the media had influenced his decision to withdraw the plan, which drew the comment from Sir Mervyn King, outgoing governor of the Bank of England (BoE) that he found the idea “depressing”.

He nonetheless attempted to defend Goldman against accusations that although the deferral plan was legal, it was morally questionable.

“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,” said Blankfein. “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?”

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