Web CPA – After successfully beating back legislation in Congress to raise federal taxes on the earnings of hedge fund managers, hedge funds have also succeeded in preventing New York State from raising their taxes.
The state, facing a whopping $9.2 billion budget deficit and an excruciating four-month delay in getting a budget passed, had proposed to tax the carried interest of hedge fund managers who work in New York, but live outside the state, at ordinary income rates rather than capital gains rates. The approach was similar to the tax extenders legislation in Congress that got stalled in the Senate recently after intense lobbying by hedge funds, private equity firms, venture capital firms and the like.
