NYS Lawmakers push special tax on banker bonuses

http://www.crainsnewyork.com/article/20100419/FREE/100419851/1123

With the state in its third week without a budget, a dozen legislators and two liberal policy groups are pushing for a temporary tax on Wall Street bonuses to help plug a $9 billion gap and provide New Yorkers with property tax relief.

The proposal, similar to a tax enacted in London, would levy a payroll tax on “big” bonuses worth at least $50,000 and paid to financial sector employees who earn $250,000 or more per year. The tax would start at 25% of eligible bonuses and reach 50% when total compensation passes $500,000.

Among other measures, the groups and elected officials are also calling for a temporary reduction of the stock-transfer-tax rebate, which was valued at $14.5 billion last year, and a one-time windfall profits tax on Wall Street firms.

All told, the proposals would generate $6 billion per year for two years, according to a report released Monday by the Fiscal Policy Institute and the Center for Working Families. The groups will be joined by a dozen elected officials—including state senators Antoine Thompson, Ruth Hassell-Thompson, Andrea Stewart- Cousins, Neil Breslin and Rory Lancman— at an Albany press conference on Tuesday.

“Wall Street received an unearned windfall while cities and towns across New York are being forced to lay off teachers, close parks and raise property taxes,” said Sunshine Ludder, a senior policy organizer at the Center for Working Families. “It's entirely appropriate to recapture some of those profits to help new York through this economic crisis.”

Partnership for New York City President Kathy Wylde said business groups viewed the proposal as a serious threat, but that enough elected officials believe it would have a negative impact on the local economy to make its passage is a long shot.

“A bonus tax has sealed London's fate as an also-ran in the competition to be the world financial capital,” she said. “For New York to follow suit would result in a loss of jobs and tax revenues that would make the current fiscal crisis look modest.”

anti-Wall Street taxes???

How come? Taxing bonuses provides a strong incentive to wish Wall Street the very best. It's the most pro-Wall Street move I've seen so far (including the bailout).

“A bonus tax has sealed London's fate as an also-ran in the competition to be the world financial capital,” she said. “For New York to follow suit would result in a loss of jobs and tax revenues that would make the current fiscal crisis look modest.”

oh, as always the scare tactics, where is wall street going to go? panama?

> Taxing bonuses provides a strong incentive to wish Wall Street the very best.

true, but the folks calling for it are doing it out of Wall Street hate..

Yes, much of this comes from Wall St hate. It's a well-deserved hatred.

Partial. Wall Street greed alone wouldn't have been enough... you needed all the greedy home "investors", the mortgage brokers, and idiot politicians, too.

Main Street needs to look at itself as well.

Even with the tax, Wall St. is not going anywhere. The Goldman Sachs building in Jersey City is half empty because most people refused to work in Jersey.

More people will move to NJ and transfer to a NJ office. I would.

Some people will get 100% salary increases.

oh mr. president, how sad! they've bullied you into trash talking the garden state. they'll still keep picking on you, though. that's just life.

Exactly. How hard would it be for Goldman to move back office employees to NYC, and front office across the way to New Jersey? Or UBS and RBS, which have room still in CT.

And of course, if you are on commission and earn a million dollars, you won't get taxed. If your salary is $1mm, ditto. If you get deferred stock based compensation...ditto. So its retarded.

"More people will move to NJ and transfer to a NJ office. I would."

lol, they are moving to Newark as we speak! lol, you are just proving you have no idea in what dire situation NJ's budget is :-)

so much for scare tactics. i wouldn't be surprised if Wall Street lobbyists threatens law makers with moving to Oklahoma City and the Hedge Fund industry to Tulsa. Give me a break, how naive people can be!

Tax the thieves. They have raped and pillaged the American people. Tax them to personal bankruptcy.

yeah, i don't know how many need to actually pick up and move to nj. any half-way decent town is already infested with dudes who work in financial services and their families. why are people such willfully ignorant tools when it comes to nj? i never understood that.

imho tax them till the $ given to Wall Street is fully recovered (both formal programs and all handouts from the FED, including AIG's bailout), and see what happens after that. Even if they complain, without taxpayers' handout many of them would be unemployed as we speak.

The name of the person at the Working Families Center really is "Sunshine"? Her (his?) views are stupid, but the name is pretty cool . . .

I am curious to see what people think the losses are exactly. They are still estimates at this point, but the WSJ ran an article recently on the latest loss estimates.

http://online.wsj.com/article/SB10001424052702304846504575177950029886696.html?KEYWORDS=bailout+losses

(subscription required, sorry, but if you google the article name (Light At the End of the Bailout Tunnel), you may be able to see the whole article)

The article states the latest estimate puts the total bailout cost at $89 billion. Picking out some items that may or may not be considered "wall street bailouts" we could remove the $85 billion lost on the GSE's (It is up for debate if they are wall street or government), the $28 billion lost of the auto industry, and the $49 billion lost on the home affordable modification program.

I admit that wall street benefited from all of these bailouts even though they did not get all the money directly, but so did main street. I am just saying that much of this anger is misplaced. The bailout money was given to many many industries, not just wall street. So far, wall street has done a better job of paying it back than others.

Should we put a special tax on Auto industry salaries to recoup their bailout losses?

"loan guarantees by the Federal Housing Administration and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market."

LMAO you really believe their estimate for these costs is well estimated? LOL LOL LOL

>Should we put a special tax on Auto industry salaries to recoup their bailout losses?

Yes, for all industries. Auto execs shouldn't be making millions if the companies are going bankrupt.

I dont remember the auto industry purposely creating financial investments that were complicated sold them to their customers and then bet against them? The auto industry is HEAVILY regulated and taxed. The banking industry should be heavily regulated and taxed

I don't know what the losses will be, but yes I will go by the wsj and government estimates, as the best point estimates we have right now. Do you have better information? Or do you prefer to ignore the information since it doesn't vibe with what you want to think?

Yes the point of the fed programs was the prop up the commercial paper market, but so far the federal reserve programs have shown a massive profit. Of course that can change if the housing market or economy has another large leg down.

GM ran up tons of debt that it new it couldn't pay back so that it didn't have to forcefully negotiate against lavish union benefits. Much better.

petrfitz

Do you think that the auto industry is more heavily regulated than wall street? I would disagree. I think only health care is more regulated than wall street. Government does dictate safety standards, and fuel efficiency in the auto industry, but not much beyond that. Wall street is regulated by state insurance boards, the SEC, the FED, SRO's like FINRA, and much more.

I do believe that we need to reform wall street regulation. I am not saying more or less regulation, but rather updated regulation that deals effectively with too big to fail, leverage, and derivatives.

petrfitz

I also assume you are referring to recent GS fraud charges. FYI, GS is not accused of betting against the synthetic CDO they created, they were long, and lost money on the deal. I don't want to defend their actions, but facts are facts, and many in the press are ignoring the facts.

petrfitz has yet to know what GMAC is

"GM ran up tons of debt that it new it couldn't pay back so that it didn't have to forcefully negotiate against lavish union benefits."

and now that auto is flush with low interest cash, they have lost the urgency to fix what was broken in the first place. Just watch, this period will result in the largest opportunity squandered for the American auto industry. It sickening.

Should we put a special tax on Auto industry salaries to recoup their bailout losses?

No, because the Auto industry didn't create the worst worldwide financial collapse since the Great Depression!

"More people will move to NJ and transfer to a NJ office. I would.

Some people will get 100% salary increases."

We have an entry for dumbest comment of 2010. Would anyone else like to enter?

If companies threaten to leave the city, catch them at their bluff. Goldman just built a new building. Are they going to walk away from it over a bonus tax?

But NEW YORK STATE did not bail anyone out. The Federal Government did. If anyone should have taxed them, its the IRS, not New York State. There is no justification on the STATE level for taxing New York financial workers, especially when you know the GOP governors in NJ and CT won't possibly be doing the same.

its rather insane, really.

And its hardly unrealisic that firms move to NJ or CT (or anywhere else.) 30 years ago, about 400 of the fortune 500 companies were in New York City. Of those that are still around from that time, less than 1/3 are still. And MOST of those who moved did so out of state - most often to NJ. Of the financial service industry jobs - including hedge funds - created over the last 10 years in NY metro area - MOST of the net adds have been outside of NYC - hedge funds are MOSTLY not in the city.

UBS and RBS moved to CT, Goldman built a tower in NJ for salespeople and traders and repurposed it for back office, but it could be switched at any time.

BofA is HQed in Charlotte.

Etc.

Its actually kind of shocking that people think people who might be taxed an extra million dollars a year on top of existing federal and state taxes would NOT move to NJ or CT. I 100% for sure would. The cost of a car service 24/7 to and from Manhattan would be tiny in comparison.

"The auto industry is HEAVILY regulated and taxed."

And that worked out real well, didn't it? Us makes the crappiest cars, and the companies went bust.

Union progress!

Pres, I will state it again for you:

More people will move to NJ and transfer to a NJ office. I would.
Some people will get 100% salary increases.

...X 8 more times...

There you go, I just took up your top 10 list.

NJ's population is shrinking. NJ lost $70 billion in wealth over the past 5 years. So most people will NOT move to NJ, otherwise NJ would not have lost $70 billion in wealth, now would it? And the $70 billion is not lost money in the stock or housing market.. its money that went to other states.

"And that worked out real well, didn't it?"

Yes, it did. Cars are now safer than ever. Highway fatalities are at historic lows.

And you don't think NJ will tax rich people like NY? Christie will raise taxes just as soon as he finishes stuffing his fat ass with donughts. Mark my words.

I for one have no problem re examining financial regulation (not more or less, but better, more effective regulation). I also have no problem with the idea of higher marginal tax rates for higher income earners (Obviously at some point, taxes can be too high). What I don't agree with is taxing one industries employees at a different rate than others. That just doesn't make sense. Trying to get revenge through tax policy seems very misguided to me.

"And you don't think NJ will tax rich people like NY? Christie will raise taxes just as soon as he finishes stuffing his fat ass with donughts. Mark my words."

Wow, you have not been paying attention. Christie ran on the exact opposite platform, and in fact is refusing to raise taxes. Given the opportunity to lure Wall Street firms to Jersey City, there is a 0.0% chance that even a DEMOCRATIC govenor would not agree to not have punitive taxes like NY.

And why did NJ loose people - the same reason as New York. Sky high taxes compared not only to say Texas or Florida, but even versus next door Pennsylvania or (INCREDIBLY) California.