MONEY STILL TALKS

The Dems have been considering raising the income tax on hedge fund managers from 15% to the normal rate of 37.9 percent. The managers make donations to the Dems and suddenly the raise is in doubt. An old story.

Hedge-Fund Tax Rise Faces `Uphill Climb' in Senate, Baucus Says
By Ryan J. Donmoyer and Alison Fitzgerald
Nov. 7 (Bloomberg)

``I'm not ruling anything out,'' Baucus, a Montana Democrat, said yesterday. ``It's on the table, but it's an uphill climb. Let's see where we are at the end of the day.''

About half of the House proposal's tax increases on fund managers would come from taxing carried interest as wages at rates as high as 37.9 percent instead of the 15 percent capital gains rate.

Baucus said he suspects that enough Democrats oppose the carried-interest tax increase to prevent its backers from obtaining the 60 Senate votes it would need to overcome procedural hurdles.

Democrats Split Over Bill Affecting Backers
Tax Measure Targets Hedge Funds
By Jonathan Weisman
Washington Post Staff Writer
Wednesday, November 7, 2007; Page A01

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.