Wall Street banks are considering changing the timing of their annual bonuses in a bid to avoid possible tax increases.
Lawmakers in Washington are currently discussing whether to renew the Bush-era tax cuts on the wealthiest Americans, a bracket that includes many on Wall Street. If the tax cuts expire, that will mean higher rates in 2011.
As a result, banks including Goldman Sachs (GS) are considering moving their bonus payouts form early next year to this month, The New York Times reported.
If Congress does not extend the tax cuts for the wealthiest, it could mean that a Wall Street worker who gets a $1 million bonus could pay as much as $50,000 more in tax next year.
Pay consultants say that if Goldman changes its schedule, other financial firms will follow. Bonus discussions are typically kept very quiet, with only the information on top executives released.
Goldman Sachs declined to comment to The New York Times.
Banks Consider Changing Bonus Schedule to Avoid Tax Hike