"Along with Wall Street’s resurgent bonuses will come a jump in an ancillary benefit: tax breaks...
The tax deductions, which will increase the bottom line of the banks, are perfectly legal and not new. They come as compensation for 2009 has roared back after the largest banks paid back billions of dollars in federal aid, an outlay still fresh in the minds of taxpayers. As pay goes up, so do the deductions...
The biggest tax break will go to Goldman Sachs. It expects to award its employees $23 billion in bonuses — the most in its history — after having paid back $10 billion. Because most employee compensation is a deductible expense under tax laws, Goldman Sachs, which is technically taxed at a top corporate rate of 39 percent, will save about $9 billion in federal income taxes on the bonuses it pays out for 2009, Mr. Willens said.
Obviously, the way to save $9 billion is to pay out $23 billion. Total savings? Minus $14 billion! My favorite saying about taxes is, Write-offs are like throwing both of your shoes out of the window in the hopes that the government will throw one of them back to you.
ReplyDeleteDon't forget also, the bonuses aren't taxed to Goldman Sachs, but the employees receiving the bonuses ARE taxed on them, and sometimes heavily.
ReplyDeleteTrust me, the IRS gets its share.
Mike, that's discussed at the link.
ReplyDeleteDisgusting.
ReplyDeleteI read the article and I still do not see how spending 23 billion and getting 9 billion back in tax savings adds to the bottom line.
ReplyDelete