Maybe someone can explain this to us:
In 2008, we learned that those profits and executive compensation were built on a Ponzi scheme of subprime mortgages and risky derivatives. When the Ponzi scheme collapsed, 8 of those top ten companies went bankrupt or had to be taken over by the government. The U.S. was plunged into the worst recession since the Great Depression. Unemployment soared over 10%, millions lost their homes, and across the country, gaping holes opened up in state and local government budgets.
In order to stave off an even worse economic crisis, U.S. taxpayers financed a huge bailout of the financial industry. Literally trillions of dollars of our taxpayer money financed the bailout.
The bailout worked--especially for Wall Street. By 2009, Wall Street banks and investment houses posted profits of $64 billion--triple the previous record. And Wall Street's top executives pocketed bonuses in excess of $20 billion, not much less than they took home in the "boom year" of 2006.
- In 2006 and 2007, CEOS at 10 of the top bank and mortgage companies pocketed total compensation worth $548 million, while those companies pulled down profits of over $68 billion.
In light of these facts, can anyone explain why the Legislature shouldn't impose a modest tax on Wall Street bonuses to recover a portion of our money in order to relieve the property tax burden on struggling homeowners and to preserve vital public services?
The Working Families Party is proposing that at a time when all New Yorkers are facing ever increasing property tax bills and deep sacrifices exacted by huge budget gaps, the wealthiest among us should share the pain of that sacrifice--especially since their huge salaries and bonuses were only made possible by the trillions in taxpayer money used to bail out Wall Street in 2008 and 2009.
The tax scales up to a 50% rate on all bonuses worth more than $50,000 where the recipient's income exceeds $500,000.
This two-year bonus tax will provide $4.7- $6.9 billion in revenue that should be used for immediate property tax relief for struggling New York homeowners and to mitigate devastating cuts in vital public services.
Tax revenues from the deferred portions of bonus awards are likely to be comparable to the cash bonus revenue numbers, providing additional funding to continue property tax relief and close the budget deficit.
- A 25% tax on all bonuses worth more than $50,000 where the recipient's total compensation is $250,000 or more.
We simply can't imagine a reason why a temporary tax on excessive Wall Street bonuses should not be part of the solution to solving the property tax crisis and closing the historic budget gap New York faces today. It's a matter of basic fairness. We urge you to support a Wall Street bonus tax today!
WFP Executive Director