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With Bigger Bonuses, Another Upside for Banks
Key Excerpts from Article on Website of New York Times
Posted: January 4th, 2010
http://www.nytimes.com/2010/01/01/business/01bonus.html
Along with Wall Streets resurgent bonuses will come a jump in an ancillary benefit: tax breaks. For all banks and Wall Street firms, Im sure were talking $200 billion total compensation, which would create a tax savings for the firms of $80 billion, said Robert Willens, an accounting and tax analyst in New York. 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. Many American banks already pay minuscule federal income taxes. Because of various deductions and clever tax planning the payout-related breaks will reduce their tax bills further in coming years. The biggest tax break will go to Goldman Sachs. It expects to award its employees $23 billion in bonuses the most in its history. Because most employee compensation is a deductible expense under tax laws, Goldman Sachs ... will save about $9 billion in federal income taxes on the bonuses it pays out for 2009.
Note: For a treasure trove of reliable reports on the government bailout of Wall Street, click here.
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