Posted by Leonard Steinberg on March 13th, 2014

Wall Street’s profits in 2013 were the seventh-largest ever: the combined profits of Goldman Sachs, JPMorgan Chase and other banks and brokers fell by 30% and revenues across the industry were flat, yet New York City collected $3.8 billion in Wall Street-related taxes last year, the second most ever! Tax revenues could be $100 million higher than anticipated because the City’s budget assumed a 5% decline in bonuses. New York State collected $10.3 billion in taxes from Wall Street, or 16% of all tax revenue and up from 14% in the prior year. Over $14 BILLION in tax dollars were generated by Wall Street for New York City and State combined! (That’s $ 1,684 for the City and State – not the Federal Government – to spend on every New Yorker.)

• The average bonus rose by 15% in 2013
• Bonus pools were the highest since the financial crisis and the average payout was nearly $165,000, yet 14% below the all-time high in 2006.

So why were the bonuses so high when profits were lower?

1. The workforce is smaller and cheaper, so fewer workers are sharing a smaller bonus pool: 30,000 New Yorkers who worked on Wall Street lost their jobs in the financial crisis, about a 16% drop in the workforce. While re-hiring has happened, it is substantially faster in other states like Florida and Utah which are offering banks generous tax incentives and where employees are often paid significantly less.
2. Some of the large drop in profits in 2013 reflects the massive costs paid by banks to settle litigation over boom-era abuses.
3. Wall Street firms began requiring employees defer significant amounts of pay after the financial crisis and some of that deferred compensation was paid out in 2013 when the bank stock prices had risen notably since they were issued in the dark days of the recession.

Wall Street’s profit-haul last year was the seventh-largest ever, while bonus-pools were the third highest on record. Last year’s revenues of $162.4 billion were little changed from the year before, according to New York Stock Exchange data, and less than half the peak of $352 billion generated in 2007.

So while some may be angered by the size of these bonuses considering bank profits were down, shouldn’t everyone celebrate the fact that a huge fortune was collected in taxes that benefits every single New Yorker?