Carried-Interest Tax Hike Talk Returns

Apr 14 2010 | 11:08am ET

It seems necessity can be the mother of legislation. A proposal to more than double taxes paid by hedge and private equity fund managers on some of their income is gaining momentum.

The U.S. Senate is considering the so-called “carried interest” loophole, which taxes performance fees earned by alternative investment managers as capital gains rather than ordinary interest. Capital gains are currently taxed at 15%—rising to 20% next year—while income is taxed at a top rate of 35%, rising to 39.6% in 2011.

Sen. Charles Schumer (D-N.Y.) acknowledged yesterday that closing the carried-interest loophole is “one of the things being considered.” Despite the fact that the House of Representatives has passed the bill three times, it has yet to come to a vote in the Senate, where some Democrats are known to oppose the measure.

But the White House is pushing for the tax hike, and Sen. Max Baucus (D-Mont.), who heads the Senate Finance Committee, admits that a growing need for revenue—the proposal would raise $24.6 billion over 10 years—may have changed some minds.

Baucus has previously said he would tackle the carried-interest loophole only as part of a broad tax overhaul.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...