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Obama plans to double tax rate for carried interest execs ‘gaming the system’

11 Apr 2013

washingtondc_lrgUS private equity and venture fund managers could see their tax rates nearly double if US President Barack Obama succeeds in pushing his 2014 budget proposals through the Congress.

Fund managers will see their carried interest profits taxed at the 39.6 per cent regular income tax rate under proposals unveiled yesterday, rather than the current 20 per cent capital gains rate.

Obama said, “If you’re serious about deficit reduction, then there’s no excuse to keep these loopholes open.  They don’t serve an economic purpose.

“They don’t grow our economy.  They don’t put people back to work.  All they do is to allow folks who are already well-off and well-connected game the system.”

The tax regime for private equity is not expected to change any time soon, however, as the proposal is opposed by Republicans and does not have unequivocal support within the Democratic Party.

It is also not the first time that Obama proposed eliminating carried interest. The issue is more likely to be seriously discussed in the debt ceiling talks later this year.

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