Dow Jones: Private Equity, Reinsurance Seen As Obama Tax Targets, by Martin Vaughan:
Private equity funds and offshore insurers are among industries that could see their taxes increased under a Barack Obama White House and strengthened congressional Democratic majorities. …
Near the top of the list of likely targets is a proposal, backed by House Democrats, to tax private equity fund managers' earnings at ordinary income tax rates. Some of that income is now taxed at capital gains rates of 15%.
"This has been in the hopper, and it has passed the House. The odds of it being included in a big tax bill are fairly strong," said Mark Gergen, a professor at the University of California at Berkeley School of Law. The proposal would tax certain partnership earnings known as "carried interest." Fund managers are paid a percentage of the fund's total profits when an investment is sold. Unlike management fees, which are taxed at ordinary income rates up to 35%, carried interest is subject to the lower capital gains rate. Supporters of the change argue that the fund managers are providing a service, and shouldn't be taxed at a lower rate than other service providers like secretaries and housekeepers. …
Meanwhile, a proposal to crack down on offshore reinsurers gained momentum in September with the introduction of House legislation by Rep. Richard Neal, D-Mass. The Neal bill is backed by a coalition of U.S.-based insurers including the W.R. Berkeley Corp., the Chubb Corp. (CB), and the Travelers Companies (TRV). Those companies claim that foreign-based insurers, including the ACE Group (ACE) and XL Capital Ltd. (XL), avoid taxes on their U.S. business by reinsuring policies written in the U.S. to Bermuda-based affiliates.
4 responses to “Private Equity, Offshore Insurers Are Likely Obama Tax Targets”
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
Whither Obama tax policy?
The center-left TaxVox blog, normally well-plugged in to Democratic policy wonkery, has a must-read post: What Will President Obama Do?…
This proposal should come as no surprise seeing as how the increased taxation of offshore insurers and and private equity funds was a topic frequently mentioned throughout the Obama campaign. One of the cornerstones of the president elect’s strategy advocated closing corportate tax loopholes in an effort to correct the deficit and also to set the stagefor increased taxes to fund various governmental programs.
The “tax gap” is also of major concern to the new administration. Increased revenues from changes in tax law should help lessen the impact of the current strain placed on the treasury. The GAO will hopefully benefit from some of the proposed changes in tax law. It will take some time to see how these changes impact the economy.