New York Gov. David Paterson has pledged to reject any attempt to impose higher taxes on out-of-state hedge fund managers who work in New York. Now, the second-most-powerful man in Albany appears to have signed off on the death certificate for the planned tax.
Sheldon Silver, the longtime speaker of the New York State Assembly, struck a “soft agreement” last week to kill off the tax, which would have raised an additional $50 million by taxing the performance fees earned by hedge fund manager who work in New York but live elsewhere as ordinary income, rather than capital gains. The proposal created a minor storm when Connecticut Gov. Jodi Rell pounced on it in an effort to lure the Big Apple’s hedge fund industry north to the Nutmeg State.
“There’s a good chance… that it will not be adopted,” Silver, who represents Manhattan, told the New York Post. State lawmakers and Paterson are struggling to reach agreement on how to close the Empire State’s $9.2 billion budget deficit.
Though the tax plan is all but dead, Rell’s planned recruitment dinner will go on as scheduled today in Darien. The Connecticut governor had invited New York Hedge Fund Roundtable President Timothy Selby and several high-profile New York hedge fund managers to an “intimate” dinner with her.
“I don’t know that you can conclude there is no threat from the New York legislature until the budget has been approved,” Selby told Dow Jones Newswires. “Moreover, there is no basis to conclude that the New York State legislature will not reintroduce the proposal next year. The governor was kind enough to extend the invitation, and I think we would be remiss to not meet with her to hear what she has to say.”
Between 25 and 30 representatives of the New York hedge fund industry are slated to dine with Rell tonight.