Senator: Carried-Interest Tax Hike Won’t Pass

Jan 26 2010 | 11:51am ET

The carried-interest tax loophole will not be closed, a member of the U.S. Senate Finance Committee said, which means that hedge fund and private equity fund managers won’t see their tax bills double this year.

Sen. Debbie Stabenow (D-Mich.) said it was unlikely that the Senate would pass a provision that would treat carried-interest, or a manager’s share of a fund’s profits, as ordinary income, rather than capital gains. That means that performance fees would be taxed at a top rate of 35%, rather than 15%.

The U.S. House of Representatives has already approved the closing of the loophole as part of a bill extended $31 billion in tax cuts.

“I don’t think it’s going to be part of the Senate bill,” Stabenow told Crain’s Detroit Business. “While members of the committee have brought it up, it won’t be part of any bill we pass.”

Interestingly, the House bill’s provision was championed by Rep. Sander Levin (D-Mich.), the older brother of the state’s senior senator, Sen. Carl Levin (D-Mich.).

“This is a basic issue of fairness,” the elder Levin told Crain’s. “If you put your own money at risk, you get taxed at the capital gains rate. If you put other peoples’ money at risk, your profit should be taxed as ordinary income.”


In Depth

bfinance: Fees Falling Across Asset Classes, Yet Overall Investor Costs Still Climbing

May 16 2017 | 9:53pm ET

Despite unprecedented attention on fees, new research from investment consultancy...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Risk-Based Compliance: Why Oversight Of Outsourcing Is Critical

May 10 2017 | 7:02pm ET

Compliance is notoriously one of the trickiest middle office functions for funds...

 

From the current issue of