New U.S. tax panel head targets hedge fund taxes |
Date: Friday, March 5, 2010
Author: Reuters
Representative Sander Levin will take over the Ways and Means tax-writing
panel in the U.S. House of Representatives pending the outcome of ethics probes
against fellow Democrat Charles Rangel. Below is a summary of this proposal and other positions Levin has taken on
tax issues under the panel's jurisdiction. CARRIED INTEREST Levin has several times sponsored a bill to change the tax treatment of
investment income earned by private equity, hedge funds and certain other
managers. Currently the income is treated as a dividend income, taxed about
approximately 15 percent. Advocates argue that is a huge tax break for the wealthy managers, and their
income should face an ordinary tax rate. The top tax rate is now 35 percent. The bill, backed by President Barack Obama, has passed the House three times
but meets fierce lobbying by industry and has never progressed in the Senate,
where it faces opposition from some Democrats and most Republicans. TAX HAVENS Levin has sponsored a bill to stop tax haven abuse, to amend the tax code to
impose new rules on transactions in offshore tax havens, among other measures.
The bill, which mirrors one sponsored by his brother, Senator Carl Levin, has
been widely opposed by the financial industry and has not come up for a vote. A more moderate, business-friendly compromise appears ready for passage in
Congress. That bill focuses on disclosure, and imposes a 30-percent withholding
tax on foreign banks that do not disclose U.S. accounts, among other measures. INDIVIDUAL, CAPITAL GAINS AND DIVIDEND TAXES The biggest pending issue before the Ways and Means Committee this year is
the expiration of tax cuts enacted by then-President George W. Bush in 2001 and
2003. Levin opposed the tax cuts in 2001 and 2003, and has voted against lowering
the capital gains tax. ESTATE TAX Another big item on Congress' tax policy agenda is the estate tax, which
expired at the end of last year due to a quirk in the law and the inability of
lawmakers to agree on a policy. Levin voted to extend the 2009 rates, which exempt the first $3.5 million and
tax above that amount at 45 percent. The bill moved through the House last year
but has stalled in the U.S. Senate. Congress is under pressure to take up the issue because in addition to its
expiration causing confusion this year, estate planners are at a loss for what
the policy could be next year. Without action, the tax reverts to a $1 million
exemption and a 55 percent tax rate above that amount in 2011.
Reproduction in whole or in part without permission is prohibited.
