By Ryan J. Donmoyer and James Rowley June 8 (Bloomberg) — Senate Democrats are near agreement on a plan to scale back a House-approved tax increase on investment-fund managers as part of a jobs plan, a Senate aide said. The Senate plan under discussion would tax fund managers’ profit shares at about 33 percent for assets held less than seven years, and about 31 percent for assets held longer than that, the aide said late yesterday. The House adopted a tax rate of about 35 percent on May 28, with no special rates for long-term assets. Fund managers’ profit shares, known as carried interest, currently can qualify for the 15 percent capital gains tax rate if they are generated by the sale of assets held longer than one year. The House’s $115 billion jobs measure, approved May 28, would extend unemployment benefits, restore a package of tax cuts that otherwise would expire and increase municipal bond subsidies. The Senate aims to vote this week on its version of the bill. The House plan would be partly financed by increasing the tax rate on carried interest, the share of profits paid to executives at buyout firms, venture capital funds and real- estate partnerships. Lawmakers are under pressure to complete the legislation after allowing unemployment benefits for thousands to expire at the end of May while they debate the bill’s details. More than 320,000 will see their benefits interrupted by the end of this week if Congress doesn’t act, according to the Labor Department. Democrats, who control the Senate with 59 votes, must win the support of a handful of colleagues who criticized the carried-interest tax increase because they said it would lead firms to cut jobs while the economy continues to struggle. To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net ; James Rowley in Washington at jarowley@bloomberg.net .
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Senate Said to Trim House-Passed Tax Increase on Investment-Fund Managers
By Brian Faler and Ryan J. Donmoyer March 9 (Bloomberg) — A $138 billion plan to extend unemployment benefits through the rest of this year cleared a procedural hurdle in the U.S. Senate as lawmakers moved closer to putting the measure to a final vote. Eight Republicans joined all but one Democrat in a 66-34 vote to advance the measure. A final Senate vote is likely tomorrow; the bill also needs House approval. The bill would provide $25 billion to help states balance their budgets, prevent a 21 percent cut in Medicare reimbursements and temporarily ease corporate pension-funding requirements. The legislation, partly financed by offsetting savings, would add $97 billion to the deficit, according to the nonpartisan Congressional Budget Office. The plan hasn’t drawn the same Republican opposition as a 30-day extension of unemployment benefits approved earlier this month, in part because Democrats included in it a series of tax cuts backed by Republicans. White House spokesman Robert Gibbs called today’s Senate vote “one more step forward” to put “people back to work and support families that have been the hardest hit by the economic crisis.” Gibbs said President Barack Obama is “grateful to members of both parties that helped move forward on this bill.” Senator Jim Webb , a Virginia Democrat who proposed an amendment that would impose a 50 percent tax on bonuses awarded last year to Wall Street executives, said his plan is unlikely to receive a vote. “It’s looking a little grim,” Webb said. Second Effort The legislation represents Democrats’ second major effort this year to boost the economy. A separate $18 billion plan to offer companies a tax break to hire the jobless is awaiting a final Senate vote. The bill debated today would prevent millions from exhausting their unemployment benefits this year, including a 65 percent subsidy to help the jobless buy health insurance. Fifteen million Americans were unemployed last month with 40.9 percent of them out of work for at least six months, the second highest share in more than 50 years. Forty-one percent were out of work that long in January. The measure would renew a series of tax breaks for businesses and individuals that expired Dec. 31, including a research credit backed in the past by Microsoft Corp., Amgen Inc. and Boeing Co. It would renew a break that would allow companies like General Electric Co. to defer U.S. taxes on profits from financing sales of equipment in overseas markets. Sales Taxes For individuals, the bill would renew a deduction for state and local sales taxes that could be used instead of the deduction for state and local income taxes. Some states, including Texas and Florida, don’t have an income tax. It would extend a $250 deduction for teachers who buy their own classroom supplies, and tax credits for installing energy-efficient windows, doors, and skylights that meet 2010 Energy Star standards . To help offset its cost, the bill would give the Internal Revenue Service more tools to attack tax shelters by more precisely defining when tax-avoidance transactions lack economic substance. It also would prevent paper companies from claiming a tax credit for producing fuel from a byproduct of the pulp-making process known as “black liquor.” The IRS issued a ruling last year that congressional analysts said opened the door for abuses, although companies have expressed little interest in claiming the credit. To contact the reporters on this story: Brian Faler in Washington at or bfaler@bloomberg.net ; Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net
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Jobless Benefits Measure Clears Hurdle as U.S. Senate Moves Closer to Vote
