G.O.P. Tax Overhaul Would Boost Alts. Taxes

Feb 27 2014 | 1:11pm ET

Once again, the so-called “carried-interest” tax loophole is under threat. This time, however, it’s come under attack from an unusual side.

A tax overhaul proposed by Republican Rep. Dave Camp would tax carried interest as ordinary income, with a rate of up to 35%. Currently, hedge and private-equity managers pay the capital-gains rate on their performance fees, up to 23.8%.

But much like earlier efforts to close the loophole, all of them led by Democrats, the new proposal is already being called dead on arrival.

Sen. Mitch McConnell (R-Ky.), the Republican leader on the other side of Capitol Hill, said that Hill’s plan has no chance of becoming law. Carlyle Group co-founder David Rubenstein certainly doesn’t seem concerned.

“It’s unlikely that will get into law,” he said. “I don’t think there is likely to be any tax reform legislation passed by this Congress at all.”

Camp’s proposal would cut corporate taxes from 35% to 25% and reduce the number of individual tax brackets from seven to two. The Michigan Republican, who leads the tax-writing Ways and Means Committee, wrote in The Wall Street Journal yesterday, “We can clean up provisions like carried interest that allow certain private-equity firms to get the investment-income tax rate on what anyone else would call normal wage income.”


In Depth

AIMA: Smaller Firms Remain the Lifeblood of the Hedge Fund Industry

Jul 26 2017 | 5:55pm ET

It is a hedge fund industry truism that the largest managers receive the most attention...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Rastegar: PE Real Estate Gains Momentum as Uncertainty Rises

Jul 21 2017 | 6:04pm ET

The steady march of equity markets and fundamental shift in the direction of Fed...

 

From the current issue of