They thought they’d be celebrating.
Wall Street traders who rake in hundreds of thousands of dollars a year or more eagerly awaited a Republican overhaul of the U.S. tax code. Now, many are huddling with accountants and concluding the real gains will go to billionaires and other captains of the industry. Those in trenches — the merely wealthy — are grousing.
Atop their list of worries: New limits on deductions for mortgage interest and state and local taxes — relatively high throughout New York, New Jersey and Connecticut — will cost them thousands of dollars annually while depressing the value of their homes. That would chop local tax revenues and erode the quality of schools and other amenities traders expect for their families.
As Christmas approaches and business slows, many on Wall Street are distracted by the tax bill, calculating how it may help or hurt, and looking for ways to maximize gains or minimize losses. Most spoke on the condition they not be named. Many were self-aware enough to realize they won’t garner sympathy.
One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he’s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill.
A pair of hedge fund managers said they’ll stop donating to Republicans they’ve long supported. One of them said he spent weeks berating a politician who’s taken his money, arguing the tax bill is too tilted toward corporations, rather than individuals who should get more relief.
“My clients are hard-working young professionals on Wall Street. I don’t have a lot of good news for them,” said Douglas Boneparth, a financial adviser in lower Manhattan who counsels people throughout the industry. Most are coming to terms with it. “I don’t think anyone is going to be surprised by the economic reality.”
Not everyone is furious.
“It’s going to hurt, obviously,” said Mike Dean, a broker in New York for TP ICAP Plc who voted for Donald Trump in last year’s presidential election. Dean said he’s made roughly $250,000 to $400,000 over each of the past five years, lives in New York and has a second place in Long Island. He sees the tax bump as “begrudgingly making an investment in the future of the economy.”
“In the coming years, I’m going to do better in my earnings because of the corporate tax cut,” he said. “Yet the near term is I’m going to have to pay more.”
The biggest source of pain in the tax bill is its limits on deductions. It eliminates the deduction for unreimbursed employee expenses, for example, and caps at $10,000 the deduction for local and state taxes. Homeowners can still deduct mortgage interest, but the cap for new loans would be $750,000, down from $1 million. The median asking price for a resale home in Manhattan is almost $1 million.