British evasion

10 December 2009 By James Pethokoukis

It s possible U.S. authorities could ape their UK counterparts in clipping payouts. Wall Street is unpopular and Washington needs money. But Congress struggle to impose higher taxes on private equity and hedge fund profits doesn t bode well for a U.S. version of the supertax.

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Alistair Darling, Britain's finance minister, on Wednesday said banks operating in the UK would be charged a 50 percent tax rate on staff bonuses of above 25,000 pounds ($41,000). French President Nicolas Sarkozy and UK Prime Minister Gordon Brown on Thursday together called for an exceptional tax on global bank bonuses.

The U.S. House of Representatives voted on Wednesday to extend $17 billion in tax breaks for big business and to pay for them with a new tax on fund managers' compensation and stiff penalties on foreign banks that help rich Americans hide assets offshore.

The 241181 vote, mostly along party lines, would extend for one year a host of tax breaks set to expire on Dec. 31. Many Republicans voted against the Democratled package to protest its inclusion of a new tax on carried interest earned by hedge fund and private equity fund managers. The change would set their tax rate on such profits at 35 percent instead of the lower capital gains rate of 15 percent paid now.

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