Tax-deferral cap weighed for managers

Another threat to hedge fund managers’ pay: A new proposal may keep them from deferring taxes on compensation, The Wall Street Journal reports. Democratic Congressman Rahm Emanuel of Illinois said that he would introduce a bill that would limit managers’ offshore deferrals to the amount allowed for 401(k) and individual retirement accounts, the Journal said. This year, that amount is $19,500. Currently, managers of funds that are based overseas can put off the income taxes on their pay and reinvest the deferred amount into their funds so that it can grow tax-free, the Journal said. While there was no estimate on how much revenue would come from the proposal, Democratic Congressman Charles Rangel of New York told the Journal he planned to have hearings looking into the issue. In January, the Senate approved a yearly cap of $1 million on all taxpayer deferrals. Mr. Emanuel’s proposal fits with this week’s theme in the Senate Finance and Ways and Means Committees, which held hearings on the carried interest tax hike pitch.