Obama budget calls for higher taxes on hedge funds

Did you notice that power shift in Washington? When your party has a sizable majority in the House, almost sixty votes in the Senate, and a popular president whose electoral base is expanding, that tends to translate to political capital.

If they haven't noticed it yet, the alternative investment community will notice it Tuesday when President Obama announces his proposed fiscal 2010 budget. In it, Obama calls for taxing investment income of hedge funds at ordinary tax rates, which are now as high as 39.6%, instead of the capital gains rate, which is 15% at most, The New York Times reports. The administration also plans to increase tax rates for private equity partners, as well.