City Council Wants To Tax Carried Interest

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New York's City Council is backing a plan to raise a $200 million per year tax on the investment income of hedge fund managers and private equity partners. Such a tax increase would have to be approved by lawmakers in Albany, but the council's support makes it more likely to garner approval there, the New York Sun is reporting.
The new tax is meant to repair holes in the city's budget, created in part by the downturn on Wall Street. As layoffs pile up and bonuses expectations diminish, the city is facing a dramatic fall in revenue. Of course, raising taxes on hedge fund managers and private equity partners is likely to drive them out of the city, according to critics.
The move is part of a broader push by lawmakers from Albany to Washington DC to tax "carried interest" as income rather than capital gains. Currently the city taxes management fees they at the 4% unincorporated business tax but that tax currently does not cover "carried interest."
At least one group can expect to benefit from this tax threat: owners of commercial real estate and their agents in Connecticut.

Council Gets Set To Press a Tax on Hedge Funds
[New York Sun]

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