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

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Hedgies, Economists and Musicians Mingle At Milkin Mixers In Hamptons

Aug 25 2014 | 6:00am ET

Leave it to Michael Milken to bring some gravitas and sweat to the Hamptons -- along...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.