Released: November 07, 2007

AMT fix pitted against hedge fund tax

Source: Jonathan Weisman, Washington Post (Free Registration)

In early June, as the Senate Finance Committee began examining how a new breed of Wall Street titan could be paying a special low tax rate on executives’ salaries, one of the richest of them, hedge fund manager Steven A. Cohen of SAC Capital Advisors, cut the Democratic Senatorial Campaign Committee a check for $28,500.

Just days later, with DSCC Chairman Charles E. Schumer (D-N.Y.) equivocating on legislation to raise taxes on publicly traded equity firms, hedge fund giant James H. Simons, who earned $1.7 billion last year at his Renaissance Technologies LLC, donated another $28,500 to the DSCC.

By late July, Schumer was off the fence—and on the side of the hedge funds and private-equity firms in opposing the Democratic legislation.

Later this week, Democrats will face more scrutiny over that choice. The House is to vote on a bill to stave off growth of the alternative minimum tax for a year, offer new tax breaks to middle-class homeowners and expand tax rebates for low-income parents—paid for largely by nearly $50 billion in tax increases on the burgeoning hedge fund and private-equity industries.

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