New York Passes Budget Bill without Hedge Fund Tax

Finally, 125 days late, New York Legislature approved budge bill without increasing taxes on hedge fund managers who work in the state but live elsewhere.

The State Assembly unanimously 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. The plan led Governor Jodi Rell of neighboring Connecticut to offer relocation assistance to New York-based fund executives who leave for her state.

Instead of taxing hedge funds, the New York budget bill will raise $1 billion in new revenue in part by doing away with a sales tax exemption on clothing.