President Barack Obama's government will likely finance its $467 billion jobs plan in part by slapping fresh taxes on hedge funds and private equity firms, the New York Times reports.
Specifically, the government may hike the tax rate on carried interest income, which are the profits that fund managers take in as part of their compensation.
Carried interest income taxes currently stand at a 15 percent rate, far below the 35 percent top rate on ordinary income, yet by bringing the hedge fund rate closer to income taxes, the budget office says it can whip up $18 billion in new revenue, the New York Times reports.
Private investment firms, meanwhile, are not happy.
|President Barack Obama
(Getty Images photo)
"Proposals to raise taxes on carried interest have consistently been rejected for over four years because raising taxes on investments would only sideline employers and investors and create further uncertainty in an already struggling economy," says Steve Judge, interim chief executive of the Private Equity Growth Capital Council, the industry’s trade group, the Times reports.
Obama has hinted in recent months that he wants the carried interest income tax to rise.
"How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? It's not fair. It's not right," Obama has said.
Republicans have been cautiously approving of the jobs bill, although comments from a spokesman for Republican House Speaker John Boehner show the honeymoon may be over.
"We remain eager to work together on ways to support job growth, but this proposal doesn't appear to have been offered in that bipartisan spirit," says Boehner spokesman Brendan Buck, according to the Associated Press.
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