From the Wall Street Journal:
As the House nears a vote on the new jobs bill Thursday, investment-management partnerships are crying foul over an obscure provision in the proposed legislation that they are calling punitive.
The controversial measure would tax the proceeds from the sale of an investment-management partnership—such as private equity, hedge funds and real estate firms—at ordinary income rates of 35%. The proceeds from the sales of U.S. businesses are typically taxed at the 15% capital-gains rate.
The measure is connected to the proposed changes to the taxation of “carried interest” income, or the share of profits that fund managers are paid as part of their compensation. Carried-interest income is now taxed at the capital-gains rate. If the bill is passed, the tax on carried-interest income would increase to about 35% for the next two years and rise to roughly 38% in 2013.