New York State Tax
New York State May Tax Out of State Hedge Fund Managers
New York state is considering a take hike on out of state hedge fund managers. Many hedge fund managers work in New York state but live elsewhere, and New York is trying to take advantage of this to raise $50 million taxing carried interest.
A spokesman for Democratic Assembly Speaker Sheldon Silver said by telephone on Monday that it means hedge fund managers would be treated the same way as other commuters.
Congress also has considered taxing carried interest -- profits gleaned by managing assets -- at ordinary income rates -- much to the dismay of hedge fund and private equity titans.
But last week, the federal proposal collapsed with a bill extending unemployment benefits. So for the moment, investment managers still pay only the 15 percent federal capital gains tax on their profits.
Democratic Governor David Paterson and New York lawmakers have balked at broad-based tax hikes after last year, when the top state income tax was raised to 8.97 percent for people whose annual earnings top $500,000.
Making hedge fund managers pay the state income tax is one of several options the Legislature devised after rejecting several of Paterson's proposed revenue-raisers, from letting grocers sell wine to raising tuition at public universities. Source
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