The New York state Senate is unlikely to enact a plan to raise $50 million a year by taxing hedge fund managers who commute into the state, Gov. David Paterson said.
The proposal led Connecticut Gov. M. Jodi Rell to offer relocation assistance to New York-based fund executives who leave for her state.
“You have my promise to do all I can to help,” she said in a July 16 letter to the New York Hedge Fund Roundtable, a trade group.
Mr. Paterson proposed the hedge fund manager tax last year but backed away from supporting the measure in early July. “Now Gov. Rell will have to find revenues from some other source,” Mr. Paterson said in an interview on CNBC Tuesday before a scheduled Senate vote on a revenue bill to help close a $9.2 billion gap in the state’s $135.6 billion budget.
The hedge fund manager tax, which passed the state Assembly in July, can’t become law without the state Senate’s approval.
Under the proposal, so-called carried interest paid to managers who work in New York and reside elsewhere would be subject to New York income taxes. Carried interest is the percentage of profits received by investment managers at partnerships.
New York’s top income tax rate is 8.97%. Connecticut’s is 6.5%.