Archive for January 1st, 2010

With Bigger Bonuses, Another Upside for Banks

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Published in The New York Times, January 1, 2010 by Lynnley Browning 

Along with Wall Street’s resurgent bonuses will come a jump in an ancillary benefit: tax breaks.
For all banks and Wall Street firms, “I’m sure we’re 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 who runs a consulting firm, Robert Willens LLC. The figure does not include bonus plans by hedge funds, which are likely to reduce their payouts after a down year.
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.

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U.S. economy took a dive in the 2000s, a lost decade for workers

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Published in The Wall Street Journal, January 1, 2010 by Neil Irwin

For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.
The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.
It was, according to a wide range of data, a lost decade for American workers. A decade that began in a moment of triumphalism and the idea among some economists that recessions were a thing of the past has included two of them — bookends to a debt-driven expansion that was neither robust nor sustainable.

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