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

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

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

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

 

From the current issue of

With NFL season on the horizon, it’s time to take a look at our Fantasy Football value picks. Last year, we nailed it on Drew Brees, Jordan Howard, Frank Gore and Dwayne Allen. We missed pretty badly on Duke Johnson, Demaryius Thomas, Mohammed Sanu and Eli Manning.