Goldman escapes Clinton tax plan

NEW YORK - Large American corporations and high-paying Wall Street brokerages are likely to lose the tax deduction they now claim for employees paid more than dollars 1m a year if Bill Clinton is elected president next month, writes Larry Black.

But the salary-deduction cap proposed by the Democratic presidential candidate specifically excludes professional partnerships. This exception would spare not only many of America's lawyers and accountants, but also senior investment bankers at Goldman Sachs, which is the only large Wall Street firm that remains a partnership.

The policy, one of a number of Mr Clinton's proposed measures aimed at shifting more of the tax burden to wealthier Americans, is thus good news for the 35 new partners that Goldman selected a week ago, but rather awkward for the firm's co-chairman Robert Rubin.

Mr Rubin, one of Wall Street's best-known Democrats, is Mr Clinton's senior economic adviser and is a favourite candidate to be named US Treasury Secretary in January if the Arkansas governor wins.

Mr Rubin - who made an estimated dollars 15m last year as his share of Goldman's dollars 1bn profit - denies any involvement in the proposal, which has caused considerable resentment on Wall Street and in some corporate boardrooms.

The so-called 'excessive-pay' policy argues that partners are not in fact employees, and that partnerships in any event do not pay corporate taxes.

Even without the proposed tax break, Goldman's partnerships, which are awarded every two years, are widely coveted positions. The partnerships assure each of the 167 members annual income of between dollars 2m and dollars 4m after they contribute their share to the firm's capital.

Last week's crop included two women and 10 London-based staff.