Streams

Taxing Bonuses

Tuesday, April 13, 2010

As the state and city try to fill massive budget shortfalls, the Working Families Party has proposed an up to 50% tax on Wall Street bonuses. Mayor Bloomberg and Governor Paterson are both opposed to this idea. New York City Comptroller John Liu talks about why he might support a new tax on Wall Street bonuses.

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Comments [45]

g..e.Taylor from Brooklyn Heights

I was wondering what the Working Families Party (WFP) actually had to say about the issues raised in this discussion, so I "beamed" over to their site in search of at least an answer to the question: "How much money would this proposal yield?"
No answer at the WFP site
[ http://www.workingfamiliesparty.org/2010/04/how-to-lower-your-property-taxes/ ]
From the rhetoric I saw on their site, It appears that this crowd is interested in auditioning for the "Madame DeFarge" role from A Tale of Two Cities.
Maybe Mr. Lehrer would have them on a show to explain themselves.

Apr. 14 2010 10:00 PM
g.e. Taylor from Brooklyn Heights

Represented Without Taxation

Mark Steyn:

"And yet, for an increasing number of Americans, tax season is like baseball season: It’s a spectator sport. According to the Tax Policy Center, for the year 2009 47 percent of U.S. households will pay no federal income tax. Obviously, many of them pay other kinds of taxes – state tax, property tax, cigarette tax. But at a time of massive increases in federal spending, half the country is effectively making no contribution to it, whether it’s national defense or vital stimulus funding to pump monkeys in North Carolina full of cocaine (true, seriously, but don’t ask me why). Half a decade back, it was just under 40 percent who paid no federal income tax; now it’s just under 50 percent. By 2012, America could be holding the first federal election in which a majority of the population will be able to vote themselves more government lollipops paid for by the ever-shrinking minority of the population still dumb enough to be net contributors to the federal treasury. In less than a quarter-millennium, the American Revolution will have evolved from “No taxation without representation” to representation without taxation. We have bigger government, bigger bureaucracy, bigger spending, bigger deficits, bigger debt, and yet an ever smaller proportion of citizens paying for it.

Not that the un-income-taxed will escape the other, relentless taxes that the Democrats are already imposing (and will pile on even higher unless they are stopped). Hell, the first major tax increase Obama signed into law was aimed squarely at the lower tier of American taxpayers.

It will not end there – and will end badly for everyone in this country."

Apr. 13 2010 04:13 PM
Fred from Great Neck, NY

Instead of hypothesizing about taxing Wall Street bonuses, why did nobody on your show talk about the outrageous tax hike of the New York State income tax that has already been passed last year. This affects ALL high income earners, not just a few Wall Street managers. If you're making more than $550K you no longer get the advantage of the progressive tax structure, but pay a flat tax on your entire income, and to make matters worse, at a new higher rate of 9.77%. This increases the NYS tax for a family making $550K from $40004 in 2008 to $51662 in 2009, or an increase of 29%. Now THAT I call a tax hike. And this one Ladies and Gentlemen IS permanent!

About the top 1% of New York taxpayers fall into the >$550K income level and pay about 30% of the entire NYS tax bill, or a whopping $13B of the $40B NYS income tax revenue!

This group contributes about $180B in annual reported NYS income of a total of about $600 B. The 2009 increase of about 2% in NYS income tax results in an added 4 Billion dollars of revenue from this group alone!

Not exactly chicken feed! I wonder why we haven't heard an outcry about this. Haven't these people done their 2009 tax returns yet?

Fred

Apr. 13 2010 01:14 PM
Andrea

TF: I live in a small Manhattan apt with no car so that I have a short commute so that I can spend time with my kids, including dropping them off at school and spending a few hours with them before they go to bed. You have no idea what it is that I do and how much time I do or don't spend with my family. Assume whatever you want.

Apr. 13 2010 12:51 PM
TF

Andrea
and your kids might even turn out better, if u spent more time with them

Apr. 13 2010 11:15 AM
Ernest Mehler from Manhattan

The financial problems now being experienced by most States and the Federal Government were created primarily by the incessant lowering of taxes, especially for the wealthy, carried out by the Republicans. In other words, current taxes paid on upper incomes are much too low. Obviously, Liu's proposal is excellent and should be implemented ASAP. In contrast, the Mayor's and Governor's claims that all bankers will leave the City are nonsense, as we just heard from Brian's interview with the Guardian's Editor in Chief.

Apr. 13 2010 11:10 AM
Ernest Mehler from Manhattan

The financial problems now being experienced by most States and the Federal Government were created primarily by the incessant lowering of taxes, especially for the wealthy, carried out by the Republicans. In other words, current taxes paid on upper incomes are much too low. Obviously, Liu's proposal is excellent and should be implemented ASAP. In contrast, the Mayor's and Governor's claims that all bankers will leave the City are nonsense, as we just heard from Brian's interview with the Guardian's Editor in Chief.

Apr. 13 2010 11:06 AM
Lance from Manhattan

Getting back to those higher top marginal Federal tax rates from the past:

No one seems to remember that the 70% rate of the 1960s-1970s only applied to the 0.01% highest-earning taxpayers. In other words, 99.99% of taxpayers paid MUCH lower tax rates.

http://www.mymoneyblog.com/archives/2009/01/historical-federal-tax-rates-by-income-group.html

Apr. 13 2010 10:55 AM
g.e. Taylor from Brooklyn Heights

1. How much is this supposed "tax on the rich" likely to loot, I mean collect, for the public treasury? Until you know that, you poll is not only unscientific but also unintelligent.
2. Why not reduce the salary of every (State and Municipal) public official and employee to $100,000.00 per year and reduce the total pension and disability payments to all State and Municipal retirees? Again how much money would that realize for the most vulnerable? Does Mr. Lieu, who is a graduate of the City Council of Embezzlers, want to consider that possibility?

Apr. 13 2010 10:50 AM
Lance from Manhattan

Andrea wrote, "The state and city.... are in trouble because they spend more than they earn. The fix is to spend within your means."

True.
Interesting to consider how many things people consider essential in their lives that they lived without just a few years ago, from something as simple as new cellphones, and text messaging service.

The voters (in NY and in the country more widely) haven't felt enough pain yet. They continue to vote for legislators and administrators who perpetuate the budgetary problems. Maybe things would (will) finally change when public services really take a beating and the effects can be directly seen and felt every day.

Apr. 13 2010 10:45 AM
Andrea from Manhattan

tf from 10075, I have to earn about $150k to put 2 kids through private school. I'm not even using the tax dollars that I pay on public school. At some taxing point I'll quit my job, nix the nanny, no longer need to shop for work clothes, run in the park in the middle of the day, rather than pay for a gym so that I can exercise during dark hours and forget about date night. I'll be cooking at home so restaurants and taxi cabs will lose my money.

Apr. 13 2010 10:45 AM
Amy from Manhattan

I don't agree that a 1- or 2-year tax would become permanent. If expiration is written into the law, it couldn't be extended without taking another vote, & that would make it a high-profile issue again. The legislature couldn't just rubber-stamp it, & it would be hard to go back on the original time limit. And I doubt companies would move away if they knew the tax would expire in a couple of years.

Hmm--is there a way to put this tax on the firms themselves rather than on the people who receive the bonuses? I'd be more in favor of it if it came straight out of their profits.

Apr. 13 2010 10:40 AM
Charles from Queens

These 50% proposals are fainthearted.

Let's kidnap their kids and hold them in chains until the unpopular bonus babies fork over 100%.

Apr. 13 2010 10:35 AM
mike from Upper Left Side

Wall streeters can't leave- NJ and Conn would be happy to tax as well. Too many of the best Schools, Culture, Restaurants, Recreation right here. Where would they go? LA, Dallas, Boston, Philadelphia?
This is the greatest City in the world and it is not a result of Commerce exclusivly

Apr. 13 2010 10:31 AM
mike from New Fairfield, CT

Money doesn't sit still! Bonus' are spent on houses, I'm a contractor, or on cars, or boats, or saved-which banks then have to lend out to pay interest. Cut the tax! Reap it back in sales tax!

Apr. 13 2010 10:27 AM
Andrea from Manhattan

The state and city didn't bail out Wall Street (if anything, they were beneficiaries of keeping these people and firms solvent). They are in trouble because they spend more than they earn. The fix is to spend within your means. That's what brought America down to begin with, people buying more (bigger houses, bigger cars) than they can afford. The bonuses will be spent, on school tuition, retail, services, etc. That'll pump more money and tax revenue back into the city and state.

Apr. 13 2010 10:26 AM
mike from New Fairfield, CT

Money doesn't sit still! Bonus' are spent on houses, I'm a contractor, or on cars, or boats, or saved-which banks then have to lend out to pay interest. Cut the tax! Reap it back in sales tax!

Apr. 13 2010 10:24 AM
Marc from Brooklyn

Wow. All the little Lenin's are just pouring out of the woodwork now. This City is bleeding money all over the place, and instead of dealing with that, the "Working Families Party" can only concern itself with getting its hands on more of other people's money. Where's the righteous indignation over the City Council's slush fund? Where's the consternation over the rubber classroom at Tweed? Which of our class warriors wants to address the the billions the City pays to slip-and-fall "victims"? What a joke this is. You people want to right back to the 1970's, with declining a tax base, an exploding welfare class, and looming insovlency. You can have it. I'll be doing the one thing that I never thought I'd do: leaving.

Apr. 13 2010 10:23 AM
Margarette from Brooklyn

No. The state needs to get its budget under control in a sustainable way. This would just help delay any real action and make things far more painful down the line. We've lived through this already and still dont seem to learn.

Apr. 13 2010 10:23 AM
John from Lower East Side

suzanne from Yonkers - Who are you kidding. Since when did Yonkers become the hyper-upper west side??

Apr. 13 2010 10:23 AM
David Willinger from Manhattan

Yes, yes, yes. In the old days the wealthy paid a much higher percentage of their profits in taxes than they do today. It was normal and should be so considered today, when Wall Street and banks have been responsible for depleting our entire society. Let them pay for their crimes.

Apr. 13 2010 10:22 AM
downtown

What?! Bonuses are not taxed...isn't that income?
City/State services are being cut so the wealthy can stay wealthy and the middle class are being run out of NYC?

Apr. 13 2010 10:21 AM
Paul Gallasch from Crown Heights, BK

Why wont the governor or the mayor advocate for higher taxes for wall st bonuses? Because they have to face the negative social implications everyday. They will find objective, financial reasons for their disapproval, but whether they know it or not, they (like everyone else) operates under simple social psychology: if your friends don't like something, either do you!!!

Apr. 13 2010 10:21 AM
Voter from Brooklyn

Businesses moving away is a bit of a straw man… I mean, it would be grossly less expensive for “Wall Street” to move to Iowa or Wyoming; however, I don’t really see them getting the luxury condos, professional sports, “personal services”, access to powerful people, ease to fly internationally, and entertainment options for clients out in the central plains that they get here in NYC.

Apr. 13 2010 10:21 AM
Steve Ward from North White Plains

I don't get this. I'm all for taxing the rich and having them pay a greater share of our public costs, but why target this one group of rich people? How many people are getting these large bonuses on Wall Street? Seems like too small a pool of people to fix the city's or state's fiscal woes. Let's regularize the tax codes and eliminate loopholes instead.

Apr. 13 2010 10:21 AM
Lance from Manhattan

The first caller seemed to credit the Reagan crowd with cutting top marginal tax rates from 90%.

I believe this is not correct. Top marginal tax rates were 94% during WWII, but dropped to 70% in the mid 1960s and stayed there until cut to 50% with Reagan. The rates of the 1970s were still high relative to where we are now, but not as high as many people think.

http://www.mymoneyblog.com/archives/2009/01/historical-federal-tax-rates-by-income-group.html

Apr. 13 2010 10:18 AM
Carla from Chelsea

Absolutely the state should tax the bonus, 50% seems a little low. How about 90%?

Apr. 13 2010 10:18 AM
Nancy Breslow from downtown

These Wall Street millionaires aren't going to leave the great restaurants of NYC for NJ or CT!!

Apr. 13 2010 10:17 AM
shawn onsgard from Brooklyn

I'm all for taxing upper income brackets.

Regarding cost cutting, how much money could we save by converting 10% of the NYPD vehicle fleet to bicycles?

Apr. 13 2010 10:16 AM
suzanne from Yonkers

Working Families Party -- call a demonstration of people who favor this tax. Lets show the mayor and governor where the majority of people stand on this - Let's take a stand and show our strength.

Apr. 13 2010 10:16 AM
Eric from Brooklyn

Absolutely! What is the projected amount $20 billion? As a caller said, the pre-Reagan tax cuts for the wealthiest people [those who are best able to afford a tax], not to mention the tax cut GWB pushed thru in 2001 at the outset of the war, this would restore the balance.

Apr. 13 2010 10:15 AM
Christina

NYC needs to get its budget under control starting with education and pensions.
The bonuses should be taxed but not by the state. There should be a federal tax on them.

Apr. 13 2010 10:14 AM
bernie from bklyn

why aren't these firms regulated properly instead? they should not be able to release these funds until these deals (i.e.-mortgage derivatives etc...) are proven to be solvent deals. it will incentivize proper bahavior instead of "take the money and run" mentality.
and to richard from summit- the idea that "Skill and talent will migrate to new, stronger financial centers." well, let them go, please....their skill and talent is questionable at best.

Apr. 13 2010 10:13 AM
Jacob from Brooklyn

Yes. Lets continue to punish ordinary New Yorkers and lecture them about "fiscal responsibility" and "sacrifice" while letting the financial sector run the political show. How much of that wealth they sucked up in the 00's"trickled down?"

What were the top marginal rates before the Reagan era?

The people of Oregon were responsible enough to respond to similar hard questions.

http://www.guardian.co.uk/world/feedarticle/8922738

Perhaps we could follow their example?

Apr. 13 2010 10:13 AM
Mo Wilton from East Village

Yes, we should tax the "wall street wizzards." The little people's tax dollars helped save the financial industry, without any strings attached. The mayor saying these folks will leave NYC for other cities is a scare-tactic, what "wall street wizzard" will give up their Park Ave addresses? This city is already turning third world; just walk the streets in the less affluent neighborhoods. In the last year there have been more and more homeless, more solicitor on the subways, and fewer library hours. Let the "big boys" pony up!

Apr. 13 2010 10:12 AM
Native NYker from Brkln

Yes. Bonuses after 500,000 should be taxed at a higher rate. This is being proposed in the UK. We should pay for what we consume.. However, let's propose a better solution. Let's get off the crack of Wall Street stochastics. We've depended on it for too long. Let's reconsider, what we were working on in 1999. A new economy based on Medical research, fashion and sciences. Wall Street has already gone electronic. Look at all of the hedge funds and the proposal for a new NASDAQ system in NJ.

Ah Mr Chuzzlewit...You're two pence short. :)

Apr. 13 2010 10:12 AM
sheldon from Brooklyn

There's nothing "working" or "family" about this party. They are a bunch of washed up intellectuals who know nothing about basic economics.

The state simply spends money that they don't have. That is the problem

Apr. 13 2010 10:12 AM
Ryan from Brooklyn

Considering it was us taxpayers who bailed out these firms, I think it sounds like a just solution. The only thing I would say is that the tax should not exceed approximately 30% to make it politically more palatable.

Apr. 13 2010 10:11 AM
John from Lower East Side

Why should these folks bear the burden of NYC’s legendary poor budget planning -- big municipal salaries, pensions, unions, entitlement. Lindsey, Beam, Kotch, Dinkens - need we say more.

Cut, cut, cut!!!

Apr. 13 2010 10:11 AM
RLewis from Bowery

Why is it just on Wall St.? Why not be fair across the board - union employees, union leaders, business owners, athletes, anyone who gets a big bonus? It's a bad idea, but why isn't it at least even for all?

Apr. 13 2010 10:11 AM
Ny_girl from NYC

Please explain to me why it's the bankers fault that NY can't pay it's bills?

Apr. 13 2010 10:10 AM
maya from NYC

after what these greedy bankers have put not only NY, but the entire country through, out of sheer greed and mismanagement, to contribute to the present budget woes caused mostly by THEM is the LEAST they could do..

Apr. 13 2010 10:08 AM
Richard from Summit

I am in no way connected with the financial industry. Taxing bonuses is a huge mistake. The compensation model used in the financial industry is not at all understood by Government.

Martin is dead center on target with his comment. New York City is under tremendous pressure to relinquish its position as the financial center of the world. Further taxing the best performers in this industry will only serve to weaken that position.

Even if this tax is "short term" (yeah, right! like the telephone tax imposed to pay for the Spanish-American War?), the effects will be permanent. Skill and talent will migrate to new, stronger financial centers.

How about more efficient government instead of higher and higher and higher and higher taxes?

Apr. 13 2010 10:06 AM
Voter from Brooklyn

I’d lean towards “yes” for one year because the Wall Street recovery was made possible solely because of taxpayer dollars, but with compensation/bonus packages now containing large percentages of stock at the top and not cash payouts, could this strategy backfire or produce far less in taxable income than projected?

Apr. 13 2010 10:06 AM
Martin Chuzzlewit from Manhattan

Gee, yes, let's make New York even LESS attractive to financial firms than it is now......in this digital age when there is less need than ever for them to stay in a high tax city with a voracious appetite.

Apr. 13 2010 10:01 AM

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