Wednesday, 4 May 2016
Last updated 12 hours ago
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.