It’s likely been a tough week for Jamie Dimon, Lloyd Blankfein and hundreds of other higher-ups on Wall Street. And no, not because it’s been a lousy first quarter earnings season. The top 1% had to write out some massive checks this week to cover their 2013 taxes.
The new tax system – or rather than old tax system, if you were around in the 90s –was swept through in January of 2013, but only this April were the true effects felt. The top marginal income tax for 2013 was bumped back up to 39.6%, meaning for every dollar you make over $400,000 (or $450,000 for couples), you’ll be donating 40 cents to Uncle Sam, plus city and state taxes.
The top rate for taxes on capital gains and dividends also increased from 15% to 20% and various limits were placed on itemized deductions and personal exemptions for top earners.
The end result is a reduction to the U.S. deficit, along with some frustrated wealthy folks. The average tax bill for the top 1% of earners was $525,231 for 2013, according to CNBC. Next year, that number will surge to $670,000, when the average tax rate for top earners shifts from 31.4% to 33.4%. The top 0.1%, which includes plenty of names you’ll know, had an average tax burden of $2.6 million for 2013, up from $2.3 million in 2012.
But before you go consoling Leon Black and Stephen Schwarzman, know that there is some good news for the 1 percenters. The average income for members of the club will outpace any tax increases they’ll see. The average income for the top 1% should increase to roughly $2 million in 2014, up from $1.67 million, according to CNBC.
Unconventional Ways to Break Into Wall Street (eFinancialCareers)
While it's not easy, there are methods of securing a job on Wall Street with little or no relevant experience. Here are some tips for getting through the door.
BofA’s Muddled Q1 (eFinancialCareers)
While Bank of America reported a first quarter loss, many of the bank’s underlying numbers looked good, at least when compared to the competition. Meanwhile, Credit Suisse also reported disappointing earnings.
Goldman’s Trading Problem (WSJ)
Goldman Sachs has launched an informal campaign to quell the fears of institutional investors that question the manner in which the firm trades. The ongoing thought of shutting down Goldman’s Sigma X private stock-trading venue was born from the discussions.
Co-Op Mess Gets Messier (Bloomberg)
Paul Flowers, the former chairman of Co-Operative Bank, has been charged with criminal possession of cocaine, crystal meth and ketamine, Flowers was arrested in November of last year, just months after stepping down from the bank that’s now set to post a $2.2 billion loss.
‘Birthday Suits’ (WSJ)
Several high-profile London bankers made a video for a fundraiser in which they pretend to be pitching a musical called “Birthday Suits.” It’s about bankers who moonlight as strippers, and yes it’s very embarrassing. The skit was supposed to remain relatively private but was just uploaded to YouTube.
‘Nice Try’ (NY Times)
Here’s an interesting look into the lives of Wall Street criminals, told by the courtroom illustrator who documented their sorrows coming to light. In it, the Times calls Lloyd Blankfein the former CEO of Goldman Sachs. The bank quickly reminded them of the error on its corporate Twitter page.
Hedge Funds Stinking Up the Joint (Business Insider)
Hedge funds are collectively off to their worst start since 2008. The average fund lost money in both January and March.
Buzz Around the Office
First-World Problems (NY Post)
Microsoft co-founder Paul Allen sold his $28 million Malibu mansion because he “hated the sound of the ocean” and couldn’t sleep. Come to New York and listen to the gentling hum of the FDR and then we’ll talk.
Quote of the Day: “It’s a reminder there’s still a way to go to on litigation expenses for the industry and Bank of America. You think you have your arms around what the exposure is to find there’s still room for surprises.” –Devin Ryan, an analyst at JMP Securities LLC in New York