Hedge Fund Battle Threatens Tax Bill

Sep 30 2008 | 9:54am ET

The battle over higher taxes for hedge fund and private equity managers threatens to derail a whole package of popular tax incentives and relief for millions from higher taxes.

House Majority Leader Steny Hoyer (D-Md.) warned his Senate colleagues that his caucus will not give in on offsetting those tax cuts with new sources of revenue, specifically closing a pair of loopholes that benefit the alternative investments industry. A coalition of fiscally conservative Democrats, the Blue Dogs, have refused to consider a Senate bill that extends a variety of popular tax breaks, including for renewable energy and research and development, without the offsets.

The impasse also threatens a patch to prevent the alternative-minimum tax from increasing the taxes of millions of individual taxpayers.

“We’ve been willing to compromise on everything, but not on fiscal sanity,” Hoyer said. “That is why we ask Senate Democrats to stand up to the Republican minority.”

Senate Majority Leader Harry Reid (D-Nev.) shot back, “My majority is extremely slim, 51-49, where everybody is here. I just beg my House colleagues t understand, this isn’t something we are trying to surprise them with.”


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