Carried Interest Tax Bill

Senator Says Carried Interest Tax Increase Will Not Pass

There is more news regarding the proposed bill that would increase taxes on private equity managers’ carried interest.  Senator Debbie Stabenow of Michigan, a member of the Senate Finance Committee, has said that she thinks it is unlikely that the carried interest tax reform will be included in the final Senate bill.  If it does make it into the bill and passes, private equity managers will see their taxes increase significantly as carried interest would be taxed as ordinary income from a 15% to a 35% top tax rate. 

The carried-interest tax loophole will not be closed, a member of the U.S. Senate Finance Committee said, which means that hedge fund and private equity fund managers won’t see their tax bills double this year. 

Sen. Debbie Stabenow (D-Mich.) said it was unlikely that the Senate would pass a provision that would treat carried-interest, or a manager’s share of a fund’s profits, as ordinary income, rather than capital gains. That means that performance fees would be taxed at a top rate of 35%, rather than 15%.

The U.S. House of Representatives has already approved the closing of the loophole as part of a bill extended $31 billion in tax cuts.

“I don’t think it’s going to be part of the Senate bill,” Stabenow told Crain’s Detroit Business. “While members of the committee have brought it up, it won’t be part of any bill we pass.”  Source

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