According to this story, the proposed tax hike on carried interest appears to be
dead for the time being:
Senator Debbie Stabenow, a Democratic member of the finance committee, told Crain’s Detroit Business on Tuesday a hike in the rate of taxation for carried interest would “not be part of any bill we pass”.
Boy, let's hope so. I understand the desire to go after the hedgies and Wall Streeters and the banking industry in general. Really, I do. But, as I have said
before for, oh the last
year and a half or so, this would be a disaster in the making for commercial real estate. And I am by
no means alone. As the ICSC puts it:
Unlike private equity firms, the carried interest for the general partner in a real estate partnership is not guaranteed income. Most real estate partnerships must exceed numerous hurdles,
which result in the limited partner realizing a return on investment before the general partner sees the first dollar of gain. Moreover, the general partner often experiences a significant “hold” time before seeing that gain.
So, if you really want to depress the market even more, pass this bill. If you want activity to improve at least a little, as
more and
more are predicting will happen in 2010, leave well alone. And I believe President Obama mentioned something about some capital gains relief for small business too. That wouldn't hurt either.
