Although, New York Governor David Paterson promised to reject any attempt to impose new tax on hedge-fund managers, the proposal is still alive in Albany and it hasn’t been stricken from Albany’s budget plan yet. It is certainly enough for Connecticut Governor Jodi Rell to continue her efforts to lure the New York’s hedge fund industry to Connecticut.
In June, Governor Paterson and key legislative leaders in Albany endorsed a plan to tax hedge fund managers who work in New York and live out-of-state as ordinary income, rather than capital gains. The tax hike would have raised $50 million to help close New York’s $9.2 billion budget deficit.
Last week, New York State Assembly Speaker Sheldon Silver told The Post “there’s a good chance” that the tax won’t be included in the final budget deal when it’s wrapped up in the next few weeks. Also, Mayor Bloomberg, who opposes the tax, privately called some key hedge-funders asking them to stay in New York.
However, hedge fund managers are not convinced. Their continuing reason for leaving New York is that there is still a threat from the New York legislature to enforce a tax until the budget has been approved and its removal from Albany’s budget plan is contingent on reaching other compromises. In addition, there is no basis to conclude that the New York State legislature will not reintroduce the proposal next year.
As part of Governor Rell’s efforts, representatives of 30 city-based financial firms were lured to a private dinner meeting with Rell to hear her pitch to move their businesses to Connecticut and avoid a tax increase on their industry that’s being considered in New York. A private dinner meeting was held yesterday evening in The Water’s Edge at Giovanni’s II, a steakhouse in Darien, Connecticut.