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NY to lose millions in Wall Street bonus taxes

(Agencies)
Updated: 2008-12-20 13:58

ALBANY, New York -- Underscoring how closely the fates of Wall Street and New York are intertwined, Gov. David Paterson said Friday that a single moment in the financial crisis, the decision by Goldman Sachs executives to forgo bonuses, cost the state millions of dollars.

The executives complied with the urging of New York Attorney General Andrew Cuomo and others who said in November that major Wall Street companies benefiting from federal bailouts shouldn't pay out the usual huge bonuses to executives.

Paterson says it was the right thing to do, but the result is a further hit to the state treasury.

"Things could go even more south in a big hurry," Paterson told reporters.

Losing tax revenue from bonuses was a big hit to New York's finances because Wall Street taxes accounted for 30 percent of state revenue in the last fiscal quarter.

"I think it was the right urge," he said, but "the state lost $178 million in that moment."

Jeffrey Gordon, a spokesman for the state Division of the Budget, clarified late Friday that the $178 million figure reflected an estimate of the loss of income that might be taxed, rather than the loss of tax revenue.

"Because Goldman is an industry leader, this and other developments have caused us to lower our bonus projections by $1.4 billion since our last projections in October," Gordon said. Officials now project Wall Street bonuses for the year will total $27.2 billion, almost halving the roughly $50 billion handed out last year.

Seven executives at Goldman Sachs Group Inc., including Chief Executive Lloyd Blankfein, were to get no cash or stock bonuses for 2008. Blankfein received total compensation of $54 million last year, according to calculations by The Associated Press, making him the sixth-highest-paid CEO of a Standard & Poor's 500 company in 2007.