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| Tuesday, February 9, 2010 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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November 9, 2007 3:34 PM ET
Legislation that would boost taxes on carried interest used by private equity firms, hedge funds, real estate partnerships and others passed the first big congressional challenge—a vote on the House floor—but it is likely to see stiff opposition in the Senate and from President Bush. The 216-193 vote today, largely along party lines, with Democrats supporting the bill, sends the legislation to the Senate floor. Eight Democrats opposed the bill, and no Republicans supported it. House Ways and Means Committee chairman Charles Rangel (D-N.Y.) had sponsored the bill and championed it through his committee and the House vote. However, in the Senate key Democrats like Charles Schumer (N.Y.) and John Kerry (Mass.) have been lukewarm on the bill or opposed it outright. The legislation would place a temporary patch on the alternative minimum tax to prevent middle-class taxpayers from paying higher taxes than they are intended to. There’s wide bipartisan support for such a fix; the controversy is over how to pay for it. Under current congressional pay-go rules, the bill needs to offset about $82 billion in lost revenue. One provision to do just that would change the current tax treatment of carried interest so that it is taxed at the corporate rate of up as 35% rather than the capital gains rate of 15%. Carried interest is used by various firms as a fee based on the profits from certain long-term investments. Taxation on carried interest is generally deferred until profits are realized on the fund’s underlying assets. The carried interest bill is estimated to bring in roughly $26 billion in additional taxes over ten years. Business groups have opposed taxing carried interest, saying it would hurt U.S. competitiveness, and predictably decried the bill’s passage. The U.S. Chamber of Commerce said in a statement that the legislation “is not ‘tax relief’ as advertised in its title…but a shift from individual taxpayers to businesses.” The U.S. Chamber supports several tax credit extensions, including the research and development tax credit, but it opposes the carried interest provision and changes to rules on nonqualified deferred compensation. David Hirschmann, senior vice president at the U.S. Chamber, said in an interview that he doesn't think there are enough votes to overcome a filibuster of the bill, let alone a presidential veto. Further, he said that waiving the pay-go rules seems to be the best option right now, seeing as the business community has remained firmly against the carried interest provisions. Several business-related associations did voice support for the R&D tax credit-extension provisions in the bill. Senate Finance Committee chairman Max Baucus (D-Mont.) said in a statement that he plans to introduce a bill soon to temporarily fix the AMT, and that “there’s no doubt that Congress will complete work this year on an AMT patch.” Mr. Baucus’ bill may include a separate provision to tax profits from private equity firms that become public partnerships. He may also oppose taxing carried interest. The rush to fix the AMT has been brought on by a tight time frame at the Internal Revenue Service, which has to update its tax forms and computer systems to handle filing changes. The IRS has warned that if legislation is not passed soon, millions of Americans may end up paying the higher tax. This expedited schedule means that if carried interest is to pass, it will need to be soon.
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