Hedge Funds 2012 Presidential Election
Will Hedge Funds Back President Obama Again in 2012?
Many private equity and hedge fund managers made major donations to President Obama in his 2008 presidential campaign. Now, however, there are questions of whether professionals in the private equity and hedge fund industries will support him again or back a Republican challenger. One big concern is taxation and whether new revenue increases will come in the form of closing the so-called carried interest loophole or other measures that will mean private equity and hedge fund execs pay more.
Tax increases will almost certainly play some part in the Democrats’ proposal to the bipartisan Congressional committee, when they assemble to consider the minutiae of the $1.5 trillion in deficit cuts that are required pursuant to the debt ceiling deal agreed last month between Obama and Congress.
Where will the new taxes come from? Most likely, attempts will be made to close the so-called “carried interest loophole”, thereby taking a piece of 20% profit share participation better known as “carried interest.” Traditionally, carried interest is taxed at lower capital gains rates, so long as the underlying investments are held for at least one year.
Democrats have frequently campaigned to repeal this rule and charge tax on all such revenues at the significantly higher ordinary income rates.
Will the days of Obama’s high-profile courtship of these financial titans become a thing of the past, as concerns over tax hikes take center stage? Source
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