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

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.