House Targets Hedge-Fund Tax Deferments
New bill would cut tax deferrals on overseas income for managers
By Lucas Laursen,  Newser Staff
Posted Sep 7, 2007 7:56 AM CDT
U.S. Congressman Charles Rangel (D-NY), chairman of the House tax committee, plans to hold hearings on the issue of offshore tax deferrals for hedge-fund managers. (AP Photo/Karel Navarro)   (Associated Press)
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(Newser) – Democratic Rep. Rahm Emanuel said yesterday he will draft a bill to close a loophole that allows private-equity and hedge-fund managers to defer taxes on income earned by funds abroad. Emanuel proposes to limit such tax deferrals to $19,500—the amount anyone can put into a retirement account tax-free. A  Senate bill passed earlier this year included a cap of $1 million on deferrals.

The provision could end up in a larger bill aimed at changing several provision of the tax code that have allowed private-equity and hedge-fund managers to reap extraordinary profits. The most controversial proposal would reclassify managers' profits as income, rather than capital gains, thereby raising tax rates from 15% to as high as 35%.