On February 26, President Obama and the Office of Management and Budget (OMB) released the President’s budget outline for Fiscal Year 2010. Summary Table S-6, which sets out proposals that will either increase or decrease deficits by certain amounts for 2009-2014, contains a line item proposing to tax carried interest as ordinary income beginning in 2011. The “carried interest” currently retains the character of the income of the fund’s investments and may be taxed as ordinary income, long-term capital gain or short-term capital gain. The tax rate on long-term capital gain realized by individuals is currently 15%, but is proposed to increase to 20% in 2011. The maximum federal income tax rate on ordinary income is currently 35%, with the pre-2001 maximum rate of 39.6% proposed to be reinstated.