New York Gov. Resurrects Hedge Fund Tax Plan

Jul 14 2010 | 12:40pm ET

He was for it before he was against, and now New York Gov. David Paterson has again proposed a major tax hike on out-of-state hedge fund managers.

Luckily for the hedge fund industry, the New York State Senate rejected Paterson’s “compromise” revenue bill—which would complete the state’s 105-day-late budget—out of hand.

A frustrated governor sought to push his own $900 million revenue plan after lawmakers left Albany two weeks ago without considering the Assembly’s revenue bill. But while Paterson last month backed off of a plan to tax carried interest—performance fee income—as ordinary income rather than capital gains, in effect doubling the taxes out-of-state hedge fund managers who work in New York would pay on such income, he included the measure in his version of the compromise.

His bill also included a provision allowing the state’s public universities to set their own tuition, a measure pushed by Renaissance Technologies founder James Simons.

The hedge fund industry has warned that passing the carried-interest provision would lead to an exodus of hedge funds from New York to nearby Connecticut and New Jersey. Conn. Gov. Jody Rell herself took advantage of the possibility, sending a letter to several large New York hedge funds inviting them to set up shop in the Nutmeg State.

The State Senate, however, has ignored the governor, who is not running for reelection. Senators say they plan to negotiate their own agreement, rather than accept the governor’s 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…