CBO: Carried interest tax pegged at $19 billion

Democratic efforts to hike taxes on hedge funds and other investment managers will raise $19 billion during the next decade, according to a nonpartisan estimate late Friday.

House and Senate Democrats are looking to increase taxes on "carried interest" at hedge funds, real estate partnerships, private equity firms, venture capital companies and other funds. Democrats intend to use the increased tax revenue to pay for a package of spending provisions, including an extension of unemployment benefits.

The carried interest tax is an offset for $174 billion in new spending under the package, according to the Congressional Budget Office (CBO). The measures are part of legislation up for consideration in the House as early as next week.

The carried interest tax would raise $19 billion between 2010 and 2020, according to estimates prepared by CBO and the Joint Committee on Taxation. The estimates were sent to House Ways & Means Committee Chairman Sandy Levin (D-Mich.) on Friday evening.

Lawmakers are looking to change the tax structure so that fund managers pay more of their taxes at higher income tax rates rather than lower capital gains rates. Starting in 2013, 75 percent of carried interest would be taxed at higher income rates and the remaining 25 percent would be treated as capital gains, according to a summary of the legislation.