By: Mark Glennon*
Undeterred by national ridicule heaped on Illinois last year, statehouse Democrats are pushing again for passage of the “privilege tax” on investment managers.
HB 4293 would impose a 20% tax, in addition to all other taxes, on fees that are based on capital gains. Hedge funds, private equity and venture capital would all be hit — for as long as it took them to leave, that is.
It would push all those firms out immediately and decimate the financial and tech communities, which are among the few sectors thriving in Illinois. Just by seriously considering the bill Illinois is sending a plain message to the financial community: Leave. Expect this topic to earn national scorn once again.
And, yes, the bill appears to be serious. A parallel bill already passed in in the Illinois Senate last year, SB 1719. It was sponsored by Senator Dan Biss (D-Evanston), who is also a genuine contender for governor. The new house bill is sponsored by Emanuel Chris Welch (D-Hillside).
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*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.
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If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Never understand why Real Estate managers are exempt from the surcharge in these proposals.
I’m not a lawyer, but isn’t this on the carried interest? The fact that millionaire investment managers receive capital gains treatment for their earnings with 0 basis is egregious and should be corrected. The idiot Biss also wants to tax all financial transactions. When there were 10,000 broker / traders / market makers on the floor, MAYBE you could have pulled it off, maybe. Now? Just move the server to Idaho or some other low tax locale.
Yes, it’s the carried interest issue. I agree that tax break should be eliminated but it has to be done at the federal level. Trump promised to end it but hasn’t delivered. You just can’t do it at the state level without driving the industry out.
could only wonder if the 20% tax would apply to firms handling pension investments (there big in private equity?)? maybe ferichs can straighten it all out?
Wow, how stupid, Chicago will never recover from this and will be on the fast track towards BK, probably within 1-2 years of passing.
Awesome. I =think= Connecticut and New York wouldn’t be so idiotic to pass a tax like this…. send them our way!
Indiana welcomes them and unlike New York & Connecticut we aren’t broke.