New York Gov. David Paterson expressed confidence today that a proposed increase on taxes for hedge fund managers who work in the state but live elsewhere would not pass the state Senate.
Paterson made his prediction before the Senate was to vote on a plan to close the state’s $9.2 billion budget gap. Under the $50 million revenue-raising proposal, initially proffered by Paterson and passed by the state Assembly last month, hedge fund managers who work in New York but live in another state would have their performance fee income, or carried interest, subjected to New York state taxes.
The proposal was quickly pounced upon by Connecticut Gov. Jodi Rell, who invited New York’s hedge fund community—the world’s largest—to up sticks and move north of the border. Rell met with about 30 representatives of the New York hedge fund industry last night over dinner.
“Now Gov. Rell will have to find revenues from some other source,” Paterson told CNBC.