Senator: Carried-Interest Tax Hike Won’t Pass

Jan 26 2010 | 12:51pm 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

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

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

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...