How to reduce bounty

Once you click the button, your cash is gone forever.

I'm getting senile.

Generally speaking bounty is a poor way to spend your money.  Bounty pays out incredibly quickly, several hundred for each ship blasted, which can cause thousands of credits worth of bounty to evaporate in seconds.  Worse, even a slow trickle of scouts can whittle away massive amounts of bounty over the course of several mintues.  A lot of the time you literally get nothing for it, since the pirates will only ever attack a single target no matter how close the runner up may be.  In Entrenchment and Vanilla, the pirate raiders aren't even very strong to begin with, so there's literally no reason to ever put money into bounty.  In Diplomacy, the pirate raids are absurdly strong, and unless you're at a very high skill level (enough to crush unfair difficulty AI's) they're real gamebraekers. 

All things considered, this is just a game feature worth avoiding.  Unless there's a patch (there's some talk there may be) that really deals with the fundamentals issues here, it's just doesn't work.

Actually I don't think you can collect your own bounties. It would be rather pointless as bounty is supposed to encourage others to attack your enemies, not pay yourself.

No, you can't collect your own bounties, but militia, pirates, and other players can.  That tends to deplete bounties very quickly after they are placed.

thanks everyone

I would note that bounty increases the size of the pirate fleets...so, unless you can guarantee to win the bounty bid, don't put any money there...