Wall Street bankers, who are reportedly facing a 20% cut in bonuses, aren't the only ones poorer for it, so too is Albany, which may lose $1.7 billion in tax revenue as a result of the credit crisis' impact on banks.
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New York Governor David Paterson estimated that each 10% reduction in bonus pay costs the state $350 million in tax revenues, according to a report from Reuters. Last year, New York banks paid out $33.2 billion in bonus pay.
Bonuses are estimated to contribute $700 million to lost tax revenue. The remaining $1 billion in lost revenue is the result of slumping profits that the state will miss out on taxing.
"The reality is that there is a tremendous effect that income taxes, property taxes, rising fuel prices, rising food prices and all of the debt that the state has undergone is going to have in terms of our governance," Paterson said in the report.
The state has over $20 billion in projected deficits that it has to pay over the next three years, according to the New York Post. - Maria Woehr
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See New York Post story
