Hedge Fund Commute
NY Looking to Tax Hedge Fund Pros Commuting from CT
“NO TAXATION without representation” is an ideal most Americans rally around. Not so when it comes to hedge funds. Faced with a $9.2 billion state-budget deficit, New York legislators have their eye on hedge-fund managers who work in the state but live elsewhere, in places like Greenwich, Connecticut. They want to tax the profits, or “carried interest”, of the 1,000 or so hedge-fund managers who commute regularly into New York to work (state residents already pay tax on their carried interest). Out-of-state executives at private-equity and venture-capital firms would also be targeted. That would help the state rake in around $50m annually.
The hedge-fund industry is up in arms. If New York’s proposed tax goes through it could double managers’ taxes, opponents say, because other states may continue to tax their carried interest too. Bob Discolo of PineBridge, an investment firm, says the tax “will destroy the New York hedge-fund business.”
Hedge funds are mobile, however, and more likely simply to move their offices out of New York to escape the tax. People who live in New Jersey and Connecticut may decide to bring their work closer to home. Michael Bloomberg, the mayor of New York, has dubbed the proposal “the best thing that ever happened to Connecticut”.Source