On September 12, 2011, President Obama introduced measures to pay for his recently proposed “American Jobs Act.” The American Jobs Act proposes a mix of payroll tax cuts and infrastructure spending in an attempt to stimulate the economy. As part of the President’s proposal to pay for the cost of the American Jobs Act, he asked Congress to pass a number of measures to increase revenue, including amending the tax code to treat the carried interest, or performance-based compensation, of fund managers as ordinary income, instead of as capital gains.

This proposed tax increase would impact sponsors of virtually all private funds, including private equity, venture capital, real estate, mezzanine and hedge funds. House Majority Leader Eric Cantor (R-Va.) said that he opposes eliminating the carried interest rate, saying it is the “fundamental tax law” underlying real estate deals and other investments.

The President’s remarks regarding this proposal can be found here.