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The losing tax side of scrapped bonuses

February 4, 2010

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.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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