According to published reports, Senate Finance Committee Chairman Max Baucus’ (D-Montana) substitute amendment (S. Amdt. 4301) now pending in the Senate does not include the 401(k) fee disclosure rules included in a version passed by the House (see Fee Disclosure Rides Along with Pension Relief). Additionally, the Baucus amendment scales back a legislated tax increase on investment managers’ carried interest earnings.
The Senate amendment under consideration would require that 65% of carried interest earned by investment fund managers would be taxed at ordinary income tax rates (up to 39.6%), rather than the capital gains tax rate of 15% currently applied (the rest would be taxed at capital gains rates if the investment is held longer than a year). The version passed in the House would have taxed 50% of carried interest income at ordinary income rates, but only up till 2013, when 75% would be subjected to those higher rates.
It’s not yet certain what will emerge from the Senate, or how that might be reconciled with the House version.