Carried-Interest Tax Hike Delayed Again

Jun 17 2010 | 10:58am ET

Hedge and private equity fund managers are still likely to face a major tax hike, but not just yet.

The tax and unemployment benefits bill that includes the closing of the so-called “carried-interest” loophole suffered a setback yesterday when the U.S. Senate voted against suspending its spending rules to pass the legislation. Senate rules require that any new costs be offset by savings elsewhere, but the bill, which would extended jobless benefits and some popular tax breaks as well as offer additional aid to states, fell $85 billion short of that goal.

The defeat—a dozen Democrats joined with the Republican minority to sink the plan—means that Senate leaders will have to come up with a cheaper version of the $140 billion plan, one that Senate Finance Committee Chairman Max Baucus is said to be working on already.

Both sides say they expect some form of the bill to pass eventually, and given the gap in spending and saving, it seems unlikely that the increased revenue from taxing most performance and incentive fees as ordinary income, rather than at the lower capital-gains rate, would be jettisoned. But the setback does mean than any bill emerging from the Senate will likely require a vote in the House of Representatives, which has already approved the more expensive plan.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…