Bill Pascrell Ending Tax Giveaway Act
If passed, HB9956 would introduce a substantial change in the tax treatment of income and losses related to partnership interests, particularly those providing investment management services. The bill specifies that losses for investment services partnerships will be limited to the amount of ordinary income previously recognized, restricting how losses can offset earnings. This could lead to a higher tax burden for those in the investment services sector, particularly affecting hedge funds and private equity firms where such structures are common.
House Bill 9956, also known as the 'Bill Pascrell Ending Tax Giveaway Act', aims to amend the Internal Revenue Code of 1986 to provide proper tax treatment of personal service income earned in pass-through entities. The legislation focuses on the taxation of investment services partnership incomes, which will be treated differently from other forms of income. Specifically, it seeks to ensure that any net capital gain arising from investment services partnerships will be classified as ordinary income, significantly affecting how partners in such entities report their incomes.
One of the notable points of contention surrounding HB9956 relates to its implications for self-employed individuals and small businesses operating as pass-through entities. Critics argue that this bill may deter investment by increasing tax liability for individuals whose partnerships provide investment management services. Proponents claim that the bill addresses tax avoidance strategies that exploit differences between types of income, creating a fairer tax system. Thus, the bill has generated significant debate regarding tax fairness and the impact on economic growth.