Wednesday, 6 May 2015
Last updated 5 hours ago
Apr 16 2008 | 7:26am ET
Hedge funds dodged a taxing bullet last year, when Congress failed to agree on a rate hike on so-called “carried interest.” But there’s a new call for higher taxers emanating from hedge funds’ hometown: New York City.
New York think tank the Fiscal Policy Institute is calling for hedge funds and private equity firms to pay the city’s unincorporated business tax on carried interest, primarily earned from the funds’ performance fees. The new tax—which requires both state and city approval—court generate as much as $225 million for the city.
“In view of New York’s historic income polarization—the greatest in the nation—taxing the compensation of a private equity managing partner that can run into tens of millions of dollars and higher on the same basis as the business income of a smaller business owners seems like an uncontrovertible and overdue tax change,” the FPI concluded.
According to the institute, New York—the world’s largest hedge-fund center—is home to 13 of the biggest hedge funds and 11 of the biggest p.e. firms in the world.
Under the proposal, alternatives firms would pay only about half the 4% unincorporated business tax, offset by a 23% credit against personal income taxes.
A half-dozen New York City Council members pushed the proposal yesterday at City Hall, but one estimated the idea has just a 50-50 shot of passing the chamber, to say nothing of its chances in Albany, where Republicans control the State Senate and new Gov. David Patterson has shown little appetite for new taxes.
Still, the council members and their labor union supporters called it a matter of fairness.
“If you’re a freelance writer or musician, you’re paying this tax, but if you are one of these private equity titans, these ‘Masters of the Universe,’ for some reason, you are allowed to avoid this tax through some fancy shenanigans,” Dan Cantor, executive director of the labor-backed Working Families Party, said at the press conference.
The FPI preemptively dismissed the argument likely to be heard from the hedge fund sector that increased taxes will drive hedge funds to other jurisdictions.
New York enjoys “unsurpassed attraction as a place to conduct financial service business and as a desirable residence for individuals with very high income,” it argued.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…