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Monday, July 30, 2007
Schumer, Emmanuel Make Case for Carried Interest Reform Bill
According to stories carried by Bloomberg News and the New York Times today, Rep. Rahm Emmanuel (D-IL) and Sen. Charles Schumer (D-NY) have taken a position on the carried interest tax loophole in support of equity which is commendable -- to our view -- and fully consistent with unambiguous support for closing that loophole.
In his conversations with Wall Street executives about the tax proposals, Mr. Schumer said, he has told them that he would oppose a tax increase as long as it did not also apply to other industries, like energy and real estate.
[Emmanuel] agrees with Schumer that as a matter of fairness buyout firms and hedge funds shouldn't be the only targets for punishment. Any extra burden should also be carried by oil-and-gas, venture-capital and real-estate partnerships... "Either everybody's affected, or nobody's affected."
Messrs. Emmanuel and Schumer are no doubt delighted that the only bill in Congress to close the carried interest loophole is sectorally silent -- it provides that the tax discrimination loophole regarding tax rates paid by fund managers for any sort of partnership that spins off capital gains would treat all fund managers equally, regardless of industry.
Oddly, however, the headline of Times piece -- which appeared on the front page of the paper's print edition, reads: "In Opposing Tax Plan, Schumer Breaks With Party," despite the fact that the Times called Schumer "torn" on the issue and that the leadership of neither party has taken a position as clear and supportive as Schumer's.
Posted by Dana Chasin
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