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

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Is Steven Cohen Going to Buy the Brooklyn Nets?

Jan 19 2015 | 6:49am ET

Rumors that Steve Cohen was interested in the Brooklyn Nets emerged after Scott...

Guest Contributor

Investors Benefit From Evolution Of Fund Of Hedge Funds Model

Jan 22 2015 | 12:27pm ET

The evolution of the fund of hedge funds model over the last few years represents...

 

Editor's Note