Tax-writing committees in Congress are weighing a curtailment of a little-known tax break that aides private equity firms and hedge funds in cutting their tax bills, The New York Times reported Thursday.
The proposal, separate from recent legislation that would affect private equity firms that go public, would target a little-known practice that allows private equity and hedge funds to pay only 15 percent instead of 35 percent, the ordinary top tax rate, on capital gains generated on performance fees, the source of most of the firms income, according to the newspaper.
In addition to hedge funds such as Fortress Investment Group LLC the change in tax code would also hit venture capital firms, real estate partnerships, and numerous oil and gas companies which use similar accounting in order to pay a lower tax rate, the paper reported.
The bill is being sponsored by Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Charles Grassley, R-Iowa. In the House chairman of the ways and means committee Charles Rangel, D-N.Y., has announced plan to hold hearings on the proposal after the July 4 recess, the paper reported.-New York State Society of Certified Public Accountants
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