Connecticut Governor Jodi Rell sent an letter to Timothy Selby, who is the president of the New York Hedge Fund Roundtable yesterday inviting them to move to Connecticut.Reuters got a copy of the letter, in which she wrote:
“As lawmakers in Albany consider a proposal to vastly increase the tax liability of hedge fund professionals who work in New York – many of whom have already wisely decided to live in Connecticut – I would like to convey a very simple, yet heartfelt, message: Connecticut welcomes you!”
Mayor Bloomberg said yesterday that he thinks Governor Patterson’s proposal is stupid (not in those words) for exactly this reason: Every hedge fund manager who commutes from their home in CT or NJ to New York City for work would (probably) move their business home if the proposal passed.
“I think it’s the best thing that ever happened to Connecticut,” he told reporters.
He might be right.
Tax experts told Dealbook that if Patterson’s proposal passes, people who earn investment gains (like hedge fund managers) could be taxed twice on them.
Currently, the state where people work taxes their income and the state where people live taxes their investment gains or “carried interest gains”. (There is considerably less tax on investment gains.)
New York would, if the proposal passed, tax carried interest gains like regular income. So maybe, Connecticut would continue to tax the investment gains and they would be taxed twice.
Just kidding. This will never happen. It is illogical and New York Mayor Bloomberg agrees.
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