Tapping its inner Briton, the Working Families Party is calling for a bonus tax.
With the state budget six days past due, the party sent a letter out to supporters and legislators today urging support of a measure that would put a 50-percent tax on bonuses of more than $50,000 for those making a total of over $500,000 a year, and a 25-percent tax for those who make over $250,000 a year. This is similar to an idea pushed earlier this year by SEIU 1199–one that didn’t gain much momentum in the Legislature.
The WFP says the tax could bring in $4.7 billion to $6.9 billion in new revenue. It would be a payroll tax, therefore levied on the employer, not on the employee. And it would apply to both cash and stock bonuses. Of course taxing the bonuses would make it advantageous for employers to ramp up base salaries, in which case bonuses–but not necessarily compensation–would be lower, and not pull in as much revenue.
From a letter sent from WFP leaders to legislators:
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.
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.
The concept of a bonus tax has been met with revulsion by business groups, who fear an exodus of the financial sector. In Britain, where a tax was passed last year, there’s some early anecdotal evidence of fleeing companies.
The Paterson administration has also raised concerns about over-taxing the rich, given the possibility that they will leave the state.
A spokesman for the Division of Budget, Matt Anderson, said in a statement that the focus should be on spending cuts.
“Reining in overspending after decades of unaffordable growth is the best way to put our long-term fiscal house in order and achieve a responsible, structurally balanced budget,” he said.