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Wall Street gives, Wall Street taketh away

Feb 23, 2011 7:10 am
The Albany Business Journal has a piece up about how a report to be released February 23 is expected to reveal that cash bonuses on Wall Street—a key economic engine for New York—dropped in 2010, making for some bad news for the state, which faces a $10 billion deficit and relies on the downstate securities industry for almost 15 percent of all tax collections. According to state Comptroller Thomas DiNapoli's annual report on Wall Street year-end bonuses, bonuses hit a record $34 billion in 2006—then dropped by half within two years as the recession ravaged the stock market. Bonuses rebounded by 17 percent in 2009, to top $20 billion. The latest batch of bonuses should be smaller, DiNapoli said in a November 2010 forecast. “The securities industry has reported declines in revenues, profits, and compensation as 2010 has progressed, and compensation was down compared to one year ago. It appears that the cash bonus pool will be smaller than last year,” DiNapoli said. Taxes on Wall Street wages, bonuses, real estate deals and capital gains totaled $12.3 billion in the state’s 2008-09 fiscal year—triple what they were six years before. The total is equal to 20 percent of all taxes the state collected. But taxes from Wall Street dropped by 30 percent, or $3.6 billion, in the state’s last fiscal year, as capital gains activity suffered. Expectations of smaller year-end bonuses led DiNapoli to predict that Wall Street tax revenue would drop another $775 million this fiscal year, which ends March 31. Talk about mixing emotions regarding Wall Street, riches, and the distribution (and redistribution) of wealth we both love and hate in this country.