Geithner Pledges White House Backing For Carried-Interest Tax Hike

Feb 5 2010 | 12:14pm ET

U.S. Treasury Secretary Timothy Geithner said the White House would fight to close the so-called “carried interest” loophole that taxes alternative investment managers at the capital gains rate on their share of a fund’s profits.

Asked by Sen. Sheldon Whitehouse (D-R.I.) if President Barack Obama, who included the closing of the loophole in his budget this year, was only “nominally” supporting the oft-proposed and oft-rejected measure, Geithner said he and the administration would “fight for it.”

“Even though the measure doesn’t produce a lot of revenue, it’s good economic policy,” Geithner told the Senate Budget Committee of a plan which would increase taxes on hedge fund and private equity managers by $24 billion over the next decade. The secretary said passing the measure would help restore “balance and fairness” to the tax system, and that he would push his British counterparts to adopt a similar measure.

Under the current tax regime, alternative investments managers pay only the lower capital gains rate—currently 15%—on their performance fee income. Obama’s plan would tax it as ordinary income, with a rate that currently tops out at 35% and would increase to 39.6% under Obama’s budget.

Despite the backing of the White House, it is far from certain that the carried-interest provision will pass. Sen. Debbie Stabenow (D-Mich.) last month predicted that it would not be part of the Senate budget bill.


In Depth

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

The Truth About Track Record Portability

Jul 24 2014 | 5:55am ET

The number of private funds converting to mutual funds has increased significantly...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note