Bonus tax could hit 10,000 employees

WASHINGTON, April 1 (UPI) -- A former U.S. Treasury Department official said the bonus check tax bills under consideration in the Senate would affect about 10,000 people.

Jeffrey Paravano, who chairs the tax group at Baker Hostetler in Cleveland, said two bills in the U.S. Senate and the one in the House -- which would affect about 1,000 people -- were designed to avoid targeting American International Group Inc. employees only, which would presumably be unconstitutional, The Seattle Times reported Wednesday.

"Congress knows how to target things, and I think they knew … there were mid-level mangers who were receiving smaller bonuses," Paravano said.

While the anger has cooled somewhat in Washington, the bills were crafted after AIG announced it was giving out $165 million in bonus pay, in spite of receiving $170 billion in emergency bailout assistance.

In Seattle, as it stands, the Senate tax bills would include 1,900 former Washington Mutual employees who work temporary jobs at JPMorgan Chase and were promised retention pay for helping JPMorgan transition as the bank's new owners.

One bill the Senate is considering would hit employees with household incomes above $250,000 with a bonus tax of 90 percent if their employer received more than $5 billion in federal bailout funds.