Bill Ackman Says Hedge Funders Wouldn’t Mind A Higher Tax Rate On Carried Interest Income
by Staff Writer on January 26, 2012
By Linette Lopez and Lisa Du
During Pershing Square founder Bill Ackman’s appearance co-hosting CNBC’s Squawk Box this morning, he distanced himself and his firm from the private equity industry—which has received a recent bout of bad publicity due to its connection to presidential hopeful Mitt Romney.
The hot Romney issue right now is the tax rate (15%) on carried interest income, which is money hedge funds and private equity firms make from deals after expenses and investors are paid.
Carried interest is “not as a good a deal” for hedge funds as it is for private equity, Ackman told Squawk Box.
He explained that he does not pay carried interest on most of his income because of the way his fund is structured in terms of offshore and onshore money.
About 60% of his fund’s money is offshore, and “100% of the incentive fee for that we get for the offshore fund is taxable as ordinary income,” Ackman said.
For money in Pershing’s onshore funds, the carried interest tax loophole only applies to money made off assets that are held in the long-term.
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