| |||||||||||
| |||||||||||
 It appears President Obama is serious about keeping those campaign promises, as his first proposed budget socks private equity executives, venture capitalists and hedge funds with a nearly 20% tax hike on "carried interest."Should the Democrat-heavy Congress pass, Obama's budget the new tax rate on carried interest -- the primary compensation for general partners in private capital funds -- would jump to 39.6% from the current 15%. LBO shops, venture firms and hedge funds have been catching flak over the 15% tax rate on the carried interest they charge their limited partners for nearly two years now, and Obama had promised on the campaign trail to do something about it once in the White House. Members of the House of Representatives had railed against the 15% tax since 2007, claiming that it should be taxed like income. The attack on their compensation prompted a group of the largest buyout firms formed a lobbying group -- the Private Equity Council -- to represent their interests on Capitol Hill and to turn back the tide of bad press LBO shops were receiving. While no one likes a tax hike on their own compensation, the situation may not be as bad as it looks on the face of it. With the credit crisis making leveraged buyouts as rare as snow in July, there's not all that much money for Uncle Sam to tax nowadays. As the Carlyle Group's David Marchick commented at The Deal's M&A Outlook 2009 conference in November, "I think the environment has changed dramatically on the carried-interest debate." Marchick continued "It's shifted because there is no carry. Look at Blackstone's earnings. People can't do deals, and that affects carry." - George White See 2010 federal budget See Dealscape on carried interest CategoriesPrivate capital video
Categories
Blog roll
Archives
| |||||||||||
|
|
|
|
|
©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.
