Wall Street profits may be reaching record highs but tax revenues have seen a dip recently due to lawsuits, a report released Tuesday by the state comptroller said.
Comptroller Thomas DiNapoli’s analysis of the securities industry found that the city’s securities sector earned $8.7 billion in the first half of the year, a 13% drop from last year.
The comptroller said an increase in settlements paid for lawsuits related to the 2008 financial crisis is the cause for that dip. The six largest banks paid $130 billion in those cases.
“Right now, it’s clear that Wall Street is still an industry in transition,” DiNapoli said in a conference call with reporters.
With less revenue, securities companies paid less taxes to the city. The industry generated $3.2 billion for the city so far in 2014 compared to nearly $3.6 billion last year, according to the report.
Securities taxes made up 6.7% of all city tax revenue this year, compared to nearly 11% in 2008. DiNapoli said the city’s budget has managed with less Wall Street revenue over the last few years and so it wouldn’t be too adversely impacted by this year’s decrease.
“For the city and state these projections don’t throw either budget out of whack. The experience of the post financial crisis environment is that there is a more conservative estimate when it comes to revenues,” he said.
Although he predicted that there will be more settlements in the future, the comptroller said that tax collections will increase in the next fiscal year since securities companies will have bigger capital gains.
