Hedge Funds Politics & Regulation

Offshore compensation tax break bites the dust

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A Congressional bid to make hedge fund managers pitch in $25 billion to help defray the cost of the $700-billion financial bailout package may not turn out to be the boon for the U.S. Treasury that its promoters are anticipating.

After trying but failing last year to pass a bill taxing offshore deferred compensation, Senate Democrats tucked the measure into the recently adopted bailout plan. The change eliminates a tax dodge popular with hedge fund managers that allows them to defer taxes on income by salting the money away for extended periods in offshore tax havens such as