My Congressman James A. Himes (D-CT 4th district) replied to my customized Petition letter below. "Contrary to the TARP reform efforts that I have supported, I do not believe that this (financial-transaction) bill is appropriate in responding to the crisis at hand. It is an ill-timed tax on capital formation and could actually impair liquidity when the markets need it most. For these reasons, I will not support HR 1068 (and presumed DeFazio's updated bill too) Let Wall Street Pay for Wall Street's Bailout Act."
December 14, 2009 blog http://www.greencompany.com/blog/index.php Carried-interest tax hike back in the news The House passes carried-interest repeal; the bill's fate in the Senate remains to be seen. Last week, the House passed a bill to repeal carried interest tax breaks for investment managers effective in 2010 â HR 4213, the "Tax Extenders Act of 2009â http://www.govtrack.us/congress/vote.xpd?vote=h2009-943 â to extend many tax breaks, and partially pay for those breaks with tax revenue generated from this possible increase. This bill accelerates the already scheduled repeal effective in 2011, per the Obama 2010 budget passed in early 2009 (Click here for more.) Weâve been warning managers of the repeal of carried interest tax breaks for more than two years. We told our clients to expect it to happen sooner rather than later based on the mood in Congress. The writing was on the wall during the 2008 presidential campaign and in Congress (in prior bill language that did not pass). Despite useless and unwise efforts by the hedge-fund industry to lavishly send Democrats higher campaign contributions, the likelihood of this repeal advanced with growing populist anger in America (and in both parties of Congress) against Wall Street over TARP bailouts, the meltdown, Wall Street recovering much faster than Main Street, high banker bonuses, and stricter lending requirements (with insufficient lending to Main Street). Now in connection with jobs bills being considered, Congress is promising tax cuts to small business job creators and hopes to pay for these tax cuts with tax increases on Wall Street and the upper class. Tax threats against Wall Street and the trading community include bonus one-off taxes (similar to those just passed in the UK and France), a global financial-transaction tax (Tobin Tax), and unfortunately repeal of carried-interest tax breaks for investment managers. There are tax increases scheduled for the upper income in 2011 when the Bush Administration tax cuts expire. Will Congress jump the gun on some of these tax increases next? Weâve been focusing our recent efforts to defeat a financial-transaction tax at home and abroad. The carried-interest tax breaks were already repealed for 2011, but Congress has jumped the gun, tagging a one-year acceleration repeal onto a tax-break extension bill. Itâs hard to vote no or campaign against that. That fight was mostly lost a year ago. Hopefully, the Senate will not agree with the House bill and give investment managers another year to deal with this significant tax increase. At least itâs not retroactive to 2009. Some states are passing retroactive tax increases now and that is especially nasty. Repeal of carried-interest tax breaks for investment managers will significantly raise the income tax bills of profitable investment managers. But it should not put them out of business like the financial-transaction tax will surely do for hyperactive traders. Note that the carried-interest tax breaks still apply to investors in a fund, who can reduce capital gains income (with the managers profit allocation) rather than be stuck with restricted investment expense treatment. With this repeal, a hedge fund will have the same tax treatment as managed accounts, with full earned ordinary income subject to ordinary tax rates and self-employment taxes. The only way an investment manager can avoid ordinary income and receive a lower long-term capital gains benefit is to personally invest money in his own hedge fund. Even the managerâs investment is deemed ordinary earned income. The recent version of the bill includes real estate rental and investment funds but exempts real estate development and oil and gas funds. Some managers may now prefer to use managed accounts to save on fund legal, accounting, tax, audit, and compliance costs. Others may prefer to keep the fund structure in order to provide profit allocation tax breaks to investors, and for the overall convenience, less transparency, and combined account savings of a fund. Financial reform may throw other kinks into these trade offs as well. Prior blogs on carried interest tax breaks being repealed: Trader tax & carried interest updates (April 28, 2009) Carried Interest Update (Aug. 1, 2007) Carried Interest in Jeopardy (June 27, 2007)
Jeffrey Sachs: How to hold the rich to their word http://www.ft.com/cms/s/0/f78f7aa2-e9af-11de-9f1f-00144feab49a.html A greenhouse gas assessment would be a major step forward in rationalising climate financing. A tax on international financial transactions, recently discussed by the Council of Europe, offers a sound base for analogous assessments for development financing. The entire world will gain enormously from the resulting predictability, fairness and follow-through of climate and development financing that we urgently need but have not yet achieved.
Even though this paper is pro tax it has a lot of good info it it - such as a timeline of things the pro transaction tax crowd is planning in 2010. We need to stay vigilent here and keep up the fight. http://www.scribd.com/doc/24186010/Global-Tax-time -Guru
I love the part acknowledging the risk of, if Gordon Brown loses the UK election, then UK support for this ends. I'm thinking that the U.S. is waiting to see who wins the UK election in 2010 before making any sort of final decision on this. If David Cameron wins, as expected, then this issue should die considerably, as he is opposed to a transaction tax. But if Gordon Brown somehow comes back to win, then it's time to start worrying.
This seems to be very coordinated now. Notice the list of talking points to argue when certian anti tax rebutals are brough up. All of the same stuff you hear from the likes of Baker and Krugeman. This is really getting traction among the far left progressives in the US and socialists in Europe. We are going to get used to this being brought up time and again few a while to come.
If Gordon Brown loses his re-election in 2010, it would be a HUGE blow to the pro-transaction tax crowds all over the world, as the U.K would no longer be on board with it. I pray that David Cameron wins.
Just keep in mind elections, we all think Cameron could be this savior. But he could be doing a Gordon Brown and just trying to win the election with this stance. One of the biggest opponents of this tax at international meetings over the years, was none other then Gordon Brown! Now he is the biggest supporter as of the past few months, elections! Merkel switched as well until she got elected. We have no idea what Cameron will really do when he gets elected. I dont believe him really. Becuase the main thing is clear is if the US starts pushing it for global level, Cameron wouldnt care at that point they can use the extra money and London wouldnt really lose to much business as they already have a tax , the stamp tax now, with exemptions. We do not know if this new FTT will replace the stamp duty and if it does, its even better for London becuase its half of what it is now! So we can also see if Cameron is as calculated as Brown. Like I said before Brown was one of the staunchest opponents of this tax in the past. So everyone keep that in mind when praying for Brown to lose and Cameron to win.
I have searched hard for anything showing that Brown was against the tax in the past, and could not find anything.