House hunting? Check out tax credit
Tax software potion No. 9

The losing tax side of scrapped bonuses

Always listen to your mother. With that extra gene for fairness that comes from trying to wrangle kiddos, my mother insisted that my brother and I pay attention to other folks points of view.

That didn't make much sense when I was six, but I see the value of it now.

So with a nod to my mom, I must point out that in addition to being very nice for the recipients, those ginormous Wall Street end-of-year checks that we've all been yelping about for the last few months do have a plus side.

Wall street sign In fact, those big bonuses actually help out other, far less well compensated New Yorkers.

Or they did, until public pressure prompted reduced payouts.

Now, say Empire State officials in Albany, the taxes on bonuses that the state had counted on are falling well short of expectations, widening New York's budget deficit by the day.

The state had expected to collect $1 billion to $1.5 billion in taxes on Wall Street pay. New York's budget director says the state coffer is about $1 billion shy of what had been projected.

A big reason for the big shortfall? The banks have been cowed by public outrage and political rhetoric into cutting back sharply on the amount of cash they pay as bonuses.

Now, I'm definitely not saying that financial firms should over pay these Wall Street bandits employees. But it is worth noting that without their bonuses and corresponding taxes, some lower-paid New Yorkers might end up picking up the tax slack.

Yep. Sometimes life truly ain't fair.

Related posts:

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.