As reported by FINAlternatives, the New York Legislature managed—finally—to pass the last piece of the state’s very late budget without increasing taxes on hedge fund managers who work in the state but live elsewhere.
The State Assembly agreed to drop the proposed tax, which would have raised $50 million to help close the state’s $9.2 billion budget deficit by subjecting the performance fees earned by out-of-state hedge fund managers to the state’s income tax. Late last night, the State Senate also approved the bill, finalizing the budget 125 days late.
Instead of taxing hedge funds, the bill will raise $1 billion in new revenue in part by doing away with a sales tax exemption on clothing.
The potential hedge fund tax led to a major push by Connecticut Governor Jodi Rell to lure New York’s hedge funds north of the border.
For previous Compliance Avenue posts on this subject, see:
NY Gov Paterson Drops Tax On Nonresident Hedge-Fund Managers
NY Hedge Fund Tax Update: Not Moving to Connecticut Just Yet