Hello,
So the big news story this week is Mitt Romney's 13.9% tax rate. His rate is so slow because "carried interest" is taxed at the capital gains rate of 15%. I was wondering if this low rate applies to all employees in the hedge fund industry in the United States. Typically hedge funds charge 2-and-20, that's 2% of AUM as a management fee, and 20% of gains as a performance fee. As I understand, the income from the management fee is taxed as regular income, and the performance fee is taxed as capital gains.
I would think most hedge funds pay employee's bonuses from the performance fee. If I join a hedge fund, can I expect my bonus to be taxed at capital gains? or do you have to be a "partner" to qualify for carried interest?
So the big news story this week is Mitt Romney's 13.9% tax rate. His rate is so slow because "carried interest" is taxed at the capital gains rate of 15%. I was wondering if this low rate applies to all employees in the hedge fund industry in the United States. Typically hedge funds charge 2-and-20, that's 2% of AUM as a management fee, and 20% of gains as a performance fee. As I understand, the income from the management fee is taxed as regular income, and the performance fee is taxed as capital gains.
I would think most hedge funds pay employee's bonuses from the performance fee. If I join a hedge fund, can I expect my bonus to be taxed at capital gains? or do you have to be a "partner" to qualify for carried interest?
