Barclays to shrink its tax-abuse unit after public fury
Barclays will take the axe to its controversial tax structuring unit. . . which at its peak may have generated as much as three-quarters of profits at Barclays’ investment banking operation,The unit is to be shrunk severely but not eliminated completely. Why not?
This unit, the "Structured Capital Markets" unit, was earning pure, unadulterated, unproductive economic 'rents' - forms of income that are parasitic on genuine wealth creation: Adam Smith called rents the 'income of men who love to reap where they never sowed.' In this case the rents were extracted directly from British and other taxpayers. Part of this was Barclays avoiding taxes itself; part of it was cooking up tax avoidance schemes for others, and taking a share of the proceeds. Executives from this unit are currently on trial in Italy for helping set up a tax evasion scheme. The scandals and abuses spewing from this unit are, in fact, legion.
As part of their justification for the latest move, a Barclays spokesman noted that
"elements of our tax advisory business have generated negative media and political attention". . . All activities would in future be “screened for reputational impact” as well as profitability.Interesting. Very interesting. We won't, of course, trust Barclays to do the right thing until we see hard, credible evidence of it. But the fact that they feel compelled to say this, and to take concrete moves towards curbing one of the most abusive businesses in Britain, is a sign that some things are changing.
Endnote and thought for the day, from OfTwoMinds:
"The parasitic financial Elite don't do any "work" in the sense of something beneficial for society, as no voluntary payment for their services exists. If a parasite's entire income is leeched from the productive, then isn't their entire income a tax on those creating value?"Well, yes, quite.