The carried interest tax issue, however, is a red herring and a topic for another time.
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The Masters of the Universe have almost effortlessly destroyed previous attempts to close the carried interest tax break and remain confident in taking on President Obama.
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To wit, the largest U.S. private-equity funds and venture capital firms have relied on a five-year, multimillion-dollar lobbying campaign to protect the carried interest tax break.
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Conversely, partnership tax returns are a better choice for investment funds focused on carried-interest tax breaks using special allocations, plus there is generally no underlying income subjected to SE tax anyway.
Harry Reid (D-Nev.) is still trying to repeal carried-interest tax rules, thus raising taxes, for investment managers.
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Financial regulation reform is now mostly about debating the Volcker Rule and derivatives, and the carried-interest tax hike on investment partnerships is not part of it.
Carried-interest tax breaks can be good for investors as well.
The change would be poorly timed from a political standpoint, though: At the same time as legislators are trying to take away the lucrative carried-interest tax break from hedge-fund operators, Treasury would be giving it to another group of well-heeled and politically powerful professionals.
But unlike all of those folks, they are getting paid with this carried interest and paying tax at a lower capital gains rate instead of the usual ordinary income rate.
In Britain the new government is considering raising capital-gains tax and closing loopholes, and a decision is expected soon from Australia's tax office about whether the country should tax carried interest as income or capital gains.
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We should not target new sources of tax revenues at the expense of our technology industries that grow our economy, create jobs, and contribute tax revenues many times over the amount achieved by changing the tax on carried interest.
They give the ability of hedge fund managers and others who enjoy the benefit of paying tax on their income through the carried interest rule that allows them to pay a much lower percentage of tax on their income than, say, most average Americans.
Like it or not, under existing tax law, carried interest is capital.
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Romney also benefits from lower tax rates from carried-interest and futures as well.
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Chuckles aside, the group opposes Rangel's proposed tax increases on "carried interest, " the 20% cut hedge fund and private equity managers earn on profits.
Venture capitalists fear getting swept up in the controversy over the tax treatment of "carried interest, " typically a 20% stake that fund managers receive on the sale of their assets.
There were no time or votes to include repeal of carried-interest and the S-Corp SE tax breaks.
Dividends and carried interest taxed would be taxed at ordinary income tax rates for high income taxpayers.
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Carl Levin (D-MI) reintroduced legislation supported by the Obama administration that will classify carried-interest investment income as ordinary income for tax-reporting purposes.
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The 3.8% tax is prompting some managers to consider taking their own incentive pay as a fee rather than as "carried interest" subject to the 3.8% tax.
And while LBO transactions aren't threatened by tax changes, those who engage in this kind of activity face the threat of tax increases when it comes to "carried interest" that would reduce the incentives for those in this space to transact at all.
The President would do away with this treatment of carried interests and tax all income allocated to a partner from an interest granted in exchange for management services as ordinary income subject to self-employment tax.
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Venture capitalists and hedge fund and private equity managers are fretting about measures that would tax their take of an investments profits--known as "carried interest"--as ordinary income rather than capital gains.
The carried interest loophole that allows hedge fund managers and private equity investors like him a 15% tax rate on most of their earnings?
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He has said he will try to float a stripped down tax hike bill, and I presume it will include the repeal of carried interest.
Carried interest is a share of a partnership's profits that is taxed at capital-gains tax rates rather than at higher income-tax rates.
Another really good example of the tension in tax policy is the current excitement about hedge fund managers getting capital gains treatment on their carried interest.
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The principal reason for this munificently low tax rate is that much of Romney's income, even today, comes from "carried interest, " which is just the jargon used by the private equity industry for compensation received for managing other people's money.
Carried interest is treated as a capital gain on investment rather than as income from employment, and so attracts more lenient tax treatment than the latter.
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