BANKER HOLIDAY
Wall St. partying to cut their bonus tax bill
Bankers and traders will be celebrating the prospect of massive, multimillion dollar payouts — and they’ll use the mega-expenses of year-end blowouts as write-offs for their inflated tax bills, according to industry sources.
The average total Street compensation surged 13 percent last year to $422,500 — the most since the financial crisis — and that figure is expected to grow in 2018.
Compensation consultants Johnson Associates predict that equity sales and trading pros will see the biggest surge in their cash and equity bonus booty, by as much as 20 percent from last year. And they also will feel the most pain.
“The taxes on their income this year are enormous, especially if they live in Manhattan, where it can be as high as 54 percent,” said Robert Charron, who leads the tax practice at Friedman LLC.
The so-called tax cut for the rich in the recent tax overhaul is net positive overall for taxpayers. And while it gives a lot, that’s really for the superrich. The merely comfortably rich, including many on Wall Street, may feel stiffed based on residence and other factors. Charron says much of this year’s crop of bonus-rich financial professionals could be hit up hard.
By Charron’s calculations, if you live in New York City, for example, and your Wall Street bonus is paid out as ordinary in- come, you’ll pony up 54 percent in taxes.
Even though the federal tax rate under the new rules is 37 percent instead of the old 39.6 percent, city and state taxes of 13 percent, Medicare tax of 2.9 percent — plus a pesky 1 percent tax elsewhere — pile it on.
These are the rates applied for individual workers earning $500,000 or more yearly under the panoply of new tax rules.
“A lot of Wall Street employees earn these kind of sums,” said Charron who has a Rolodex of Wall Street and other rich clients. “It is not a huge amount by these standards.”
Unsurprisingly, some financial high rollers are hosting fancy soirées through the year-end holiday season, writing off large portions of bonuses. Charron said.
“I’ve a friend who helps rich people on Wall Street manage their charitable gift-giving — and he did so well this year he’s throwing two Christmas parties,” one Wall Street trader told The Post, adding that the bashes will be held at the Campbell Apartment bar and cocktail lounge at Grand Central (a favorite for dealmakers) and the rooftop of Park Avenue’s posh Union League Club.
The trendy Cipriani Italianthemed restaurants in Manhattan will be wall-to-wall with bankers ordering rounds for the house. “Many will come with their families — and it’ll be a very happy place,” said Milton Calle, manager at Cipriani Downtown.