WALL STREET’S bonus payouts are set to fall to their lowest level since 2008, US financiers warned over the weekend, as markets stay weak and transaction volumes stagnate.
And New York’s bankers will be hit by a double whammy, with taxes likely to rise sharply when Bush-era allowances expire as part of the fiscal cliff at the start of 2013.
The New York state comptroller estimates bonuses will come in at $101,000 (£63,000) on average this year – down 16.5 per cent on the year and down almost 50 per cent from 2006, according to the New York Post.
That is almost as large a fall as City workers are in line for – the London bonus pool is likely to fall 35 per cent to £4.4bn, down by over 60 per cent on its 2008 level, the Centre for Economics and Policy Research (CEBR) estimates.
Meanwhile New York’s highest earners are set to be hit by a major tax rise next year.
If the top rate of federal income tax rises from 35 to 40 per cent as tax breaks expire, combined with state taxes, someone earning the equivalent of £2m in New York would pay £998,247m in tax, according to KPMG figures given to the Sunday Times.
That is substantially more than the same earner would pay in the UK, at £929,388. In part the UK is becoming a more attractive destination because the 50p top rate falls to 45p this year.