Democrats Consider Banning Offshore Tax Deferrals For Hedge Fund Managers

Oct 18 2007 | 8:06am ET

Alternative investment managers already under siege over carried interest are facing another tax fight. Two top Democrats on Capitol Hill are taking aim at offshore corporations that hedge fund managers and other rich folks use to defer taxes on an unlimited amount of income.

Rep. Rahm Emanuel (D-Ill.), the fourth-highest ranking Democrat in the U.S. House of Representatives, and Sen. John Kerry (D-Mass.), the party’s candidate for president in 2004, are separately considering bills that would bar the practice of using offshore companies to defer paying taxes on compensation, the Capitol Hill newspaper The Hill reports.

“It’s totally legal today, but the question is: Is it appropriate and is it right?” Emanuel told The Hill, echoing arguments about carried interest, which allows hedge and private equity fund managers to pay the lower capital gains tax rate on part of their performance fee income. “The bill deals with all corporate executives who are deferring income, not just those in the hedge fund industry.”

Earlier this year, the Senate approved an annual cap of $1 million on all tax deferrals, but dropped the provision in conference negotiations with the House.


In Depth

Fund Manager's Disease: Common Symptoms and Proposed Remedies

May 3 2016 | 6:11pm ET

The cadre of 25 research analysts at Murano Systems speaks with more than 150 investors...

Lifestyle

Point72's Cohen Donates $275M To Veterans Mental Health Network

Apr 6 2016 | 8:31pm ET

Billionaire hedge fund manager Steve Cohen has formed a non-profit aimed at treating...

Guest Contributor

Agecroft: Why NYCERS Should Reconsider Exiting All Hedge Funds

Apr 18 2016 | 5:51pm ET

The recent decision by the New York City Employment Retirement System to exit its...