President Barack Obama is planning on proposing that the carried interest earned by hedge fund and private equity fund sponsors be taxed at ordinary income tax rates rather than at the capital gains rate. The proposal will be included in the budget outline Obama will release on Thursday, Feb. 26, and will be part of his plan to reduce the national deficit. The plan also calls for letting the Bush tax cuts for the wealthy lapse.

Full Story: Obama Planning to Slash Deficit, Despite Stimulus Spending, NY Times (Feb. 21, 2009)