Banker bonus tax like Britain's not favored by New York lawmakers

An excise tax on banker bonuses would unfairly target New York and reduce its state tax revenue, lawmakers from the Empire State said Friday.
 
Europe has taken flight with the idea this week, with British Prime Minister Gordon Brown saying his government will impose a one-time 50 percent surtax on banker bonuses. French President Nicolas Sarkozy has said his country will look into a tax as well.

But the idea still seems unlikely to cross the Atlantic, as the Obama administration backed away from endorsing the tax during international talks earlier this year.
 
Further, New York members would likely form a bulwark against any legislation that would tax banker’ bonuses.
 
“We are already hitting them pretty hard,” said Rep. Anthony Weiner (D-N.Y.). “I would be against that as much as Congressman [Dave] Obey [D-Wis.] would be against a dairy farmer tax.”
 
Lawmakers from New York raised a host of problems that could stem from such a tax.

They believe it could prompt bankers to flee Wall Street to other countries that would not limit their pay. In addition, it could cut into the state’s own tax revenue since banks could reduce bonuses to avoid the tax, leaving less money to be taxed under the state’s income tax.
 
“One potential problem is New York State taxes most of the bonuses to make up its revenue,” said a New York lawmaker. “If you set up a federal tax high enough, it might cause those bonuses to be reduced, which will hurt New York State’s tax revenue.”
 
Under Brown’s plan, the United Kingdom would impose a one-time 50 percent tax on 2009 bank bonuses above the equivalent of $40,000.
 
In the United States, banker bonuses would form a sizable pool of money to tax. According to compensation consulting firm Johnson Associates Inc., Wall Street performance bonuses this year may hit $26 billion this year, a jump of 40 percent from 2008.

The Obama administration and Wall Street firms have tried to quell public anger. Kenneth Feinberg, the Treasury Department’s executive pay czar, recently cut executive pay for the senior executives at seven of the largest bailed out companies. Goldman Sachs said it would not give bonuses to its most senior executives this year.
 
Rep. Mike McMahon (D-N.Y.) said a banker bonus excise tax would hurt New York City’s budget since Wall Street bonuses are critical to the city’s finances.
 
“That means teachers in schools, cops on the streets and firemen in the firehouse,” McMahon said. The New York lawmaker is firmly opposed to such a tax, calling it “narrow and focused.”
 
“Because profitability is back and bonuses are back, the budget of New York City is a lot better off than people thought it would be,” McMahon said.
 
Rep. Ed Towns (D-N.Y.) also said it would be “a bad idea” to institute an excise tax on bankers’ bonuses.
 
“I recognize the fact that we need money and I recognize the fact that New York needs help with jobs … I don’t feel this is the way to go about it to get it rectified,” Towns said. “It hits New York harder than it hits anyone else. It has to be a shared problem.”
 
Rep. Eliot Engel (D-N.Y.) said he needed more time to consider the European bonus excise tax before coming out for or against it here in the United States. But he warned Congress not to give to populist sentiment and carefully review such a proposal before it becomes law.
 
“Before we jump on the bandwagon, we have to give it careful, considerate thought,” Engel said. “I’m not going to be knee-jerk and come out for it.”

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