Taxing the Carry: This Time It’s Everyone

Posted by John Carney, Jun 22, 2007, 3:56pm

TaxingTheCarry.jpgThe other shoe has dropped.

Top Democratic congressmen introduced legislation that would doubled the tax rates on carried interest. The new tax treatment would treat the carry as ordinary income rather than capital gains. It hits everyone from venture capital funds to real estate funds to private equity firms to hedge funds.

Several prominent hedge fund managers could not be reached for comment. Presumably because they are busy moving their funds off-shore.

Fund Managers' Taxes to Double Under House Measure [Bloomberg]
Text of the Bill [pdf file via PE Hub]

0Recommend this! 6Comments
Posted in: Taxes

Comments

Posted by jt, Jun 22, 2007 4:36PM

These guys in congress are so daft its incredible, apparently learning the 'law of unintended consequences' isn't a prerequisite to getting elected...although this isn't really a big shock coming from a group for which its far more convenient (on many fronts) to just take in more taxes to cover their exorbitant spending than to run a lean and efficient operation.

Posted by Bulging Bracket, Jun 22, 2007 4:48PM

I am currently on a flight to the Caymans and a co-worker is on his way to the Isle of Man just in case, but this bill is not going anywhere and will be less than useless. Stupid grandstanding, but every accountant and lawyer will be able to get around this.

Levin's CNBC appearance was embarrassing and this incoherent, ill-conceived bill is nothing but a fundraising manoeuvre for that disgusting troll Rangel.

This might get passed with a Dem in the whitehouse, but no chance Bush signing it.

Posted by Bulging Bracket, Jun 22, 2007 4:51PM

PS This is yet opne more reason that everyone in finance NEEDS to vote and donate Republican. Sure some cover just in case the worst hits, but a fat lot of good suborning Edwards and Obama did: they're still going after us, now with our money. Don't sell the rope to those that want to hang you.

Posted by Bulging Bracket, Jun 22, 2007 5:18PM

Cancel the flight to London.

The Tories are gaving to the socialist rabble on tax treatment of carry welcome to 40% rates!
http://www.ft.com/cms/s/c0a121b2-20ee-11dc-8d50-000b5df10621.html

More fun: parliamentary hearings on taxation http://www.ft.com/cms/s/b249df2c-1ea1-11dc-bc22-000b5df10621.html

links may be subscription...

Posted by Percy Walker, Jun 22, 2007 5:36PM

Thank you, Dealbreaker, for not referring to this as an effort to "close a loophole" or "end a tax break," although I'd much prefer it if you'd start calling it an effort to impose a tax penalty on alternative asset managers.

By the way, Bulging Bracket, things are indeed looking pretty grim for managers in the UK. Phillip Yea of 3i, however, had the line of the week in his appearance before the Treasury select committee: "Carried interest focuses people. It is not some kind of golden shower at the end."

Posted by Ben_H, Jun 23, 2007 10:41AM

Jabre's got the right idea. He's started up in Switzerland and has not found that the location impedes his ability to raise money. Of course, he doesn't carry a U.S. passport. If you have US citizenship, it doesn't much matter where you go, the long arm of the IRS still feels entitled to throttle you. Try to give up your citizenship? You may find yourself on the immigration "black list". Back in 70s, Congress passed the Jackson-Vanick Amendment, which imposed sanctions on the Soviet Union for failing to recognize the natural human right of expatriation. Funny how things come full circle.

Post Your Comment