There will be plenty of debate amongst lawmakers tonight regarding increasing taxes on the profits earned by investment fund managers. This measure isn’t a stranger to the House; it’s been brought up for four years now, but it has usually died in the Senate. However, this year might be different; the intense need to increase revenue and the “public anger at the financial industry” right now might just give the measure the momentum it needs this time.
The tax change would impact private equity, venture capital, real estate fund and hedge fund managers. Basically, profits earned by fund managers would be treated as ordinary income subject to a 35 percent rate instead of the current 15 percent rate currently taxed as capital gains. (http://www.reuters.com/article/idUSTRE64C5IU20100513). This fund manager tax increase is supposed to help pay for a broader package of legislation that would extend jobless benefits and renew expired tax breaks.
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