Discussing the positive merits of a healthy financial sector in the UK has become something of a taboo, and as Yale economics professor Robert Shiller has pointed out, financial sectors are often easy targets for criticism despite the often unspoken value they contribute to society. Financial organizations and the individuals who work in them are often among the largest contributors to state taxes in many countries, and in the UK this contribution on the part of financial companies is especially true, with the financial sector bearing a large burden of the cumulative tax bill of the UK.
Largely the myth of the ‘fat cat’ investor comes from an absence of knowledge about how much the top workers in UK society contribute towards national taxes. The image of top workers ‘living it up’ has always been more popular than the image of the country’s oldest families giving up their land and houses for the general good of their country, and few realize that in the First and Second World Wars that some of the heaviest casualties were among the top earners in the country, a result at the time of officers being drawn from the public school system.
Investment bankers and other financial professionals have often worked hard to earn their pay, and their salaries partially reflect working long hours, acquiring rigorous educations, and making personal sacrifices to be more dedicated to their jobs. But because pay in the financial sector can be quite high, financial professionals are often the first to be blamed when an economy is struggling.
Financial services accounted for 14.5 per cent of the UK’s GDP, and maked up 15 per cent of the capital’s total employment. The City pumped £63bn into the government’s coffers in the 2011/12 tax year, despite double-dip recession: £21.4bn came from financial services employees’ income tax payments.
As with a small community, a society, or an economy, overall health is important, and few fields contribute more support than finance to all three of these social groups. In fact, the top earning 1% pays a staggering 30% of the total income tax for the UK, and this is good news for a country that thrives on a healthy market. Financial firms are often the lifeblood of the UK’s economy and invest in both new technology and business while infusing the market with new money.
For example, the financial market’s contribution to taxation directly effects areas of society such as educational funding and government-run healthcare systems. Take for example the cost of a university education in the UK versus the US: a typical estimate of tuition for a year of undergraduate education at Harvard University is around $40,000 per year, while due to state funding in the UK a year of education at Cambridge University is about 9,000 pounds. This is less than half of the cost for an elite education in the UK than the US, and is not only a measure of the affordability for education that exists largely thanks to an influx of tax money from the top 1% of earners but a show of the openness and access to top educational institutions that UK taxes allow.
Furthermore, the National Health Service is one of the most egalitarian organisations in the world and provides enormous amounts of care to patients regardless of their financial background. Financial workers can be proud that much of what they pay in taxes goes directly to making sure the people in their shared country have some of the best healthcare available regardless of their ability to pay for that care. Of course, the situation is not ideal and one can argue that the taxpayers are the ultimate protection when a crisis arises.
When working in the financial sector or in investment banking, there is a fair chance they contribute to the overall well-being of their country. Not only is the job can be demanding, its results benefit not only the world economy but such social programs as education and healthcare that benefit the entire population of the United Kingdom: UK has at its disposal some of the best doctors and institutions of education the world over in large part thanks to the contributions of a robust financial sector and its working members.