Politico insinuates this morning that a big sticking point for the GOP in the debt-ceiling negotiations is a demand that the earnings of hedge funds continue to be taxed at the 15% capital-gains rate rather than income-tax rates. Can this be true?
Indeed, with more than $1.5 trillion in spending cuts on the table, House Republicans have sent signals that eliminating breaks for jet-makers and oil companies could be palatable as part of a debt-limit package. But they will fight to prevent a tax hike on hedge fund managers, who earn on the income they generate for investors.
House Majority Leader Eric Cantor has said he didn’t exit the talks over those provisions, but rather Democrats’ desire to eliminate certain tax breaks for people who make more than $200,000 or couples who make $250,000 or more. Another sticking point was Democratic efforts to ban “last in, first out” accounting, in which the most recent assets acquired are assumed to be the first sold off. Cantor has also signaled openness to ending ethanol subsidies.