Thursday, January 29, 2009

All Those Bad Bonuses

President Obama harshly criticized the bonuses paid to Wall Street executives as "shameful" and "irresponsible".  This falls right in line with the politicians hammering away on business people in an effort to take more power away from the people.  Actually, President Obama calling this a stimulus package is really what is shameful and irresponsible.

Anyway, there is a flip side to the high bonuses paid to these Wall Street executives: taxes. Contrary to the rhettoric, the rich do pay taxes.  According to the NY Post, those hated tycoons received $33 billion on 2007 and another $18+ billion in 2008.  For some, it is an improvement.  I am sure President Obama will not be happy until those numbers are $0.

Here is the problem:  New York loves those bonuses.  It is tax revenue for them.  The decrease in bonuses is going to cost them over $1 billion in tax receipts over the next year.  I would surmise that Obama will get his wish in reducing the number in '09 so NY better get used to it.  

But wait, there is more.  The mayor of NYC is announcing cuts of up to $1 billion due to a growing gap between revenues and expenses.  (read article here) Now let us see who is affected.  According to this story, it is the 23,000 city workers who will be laid off.  So, the ones who were making the bonuses lost those bonuses, thus costing the ones who swept Wall Street their jobs. Notice how hating the rich plays out.

NYC has been a mess for years.  However, this situation shows how the wealthy are actually the ones supporting the municipalities.  It is a good lesson for politicians to learn who they are demonizing.  It just might be the people who are funding everything.

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