Metro

Stringer targets rich with bid to close tax hole

Scott Stringer, the Big Apple’s new comptroller, is ready to take another tax bite out of the city’s wealthiest business leaders.

The 53-year-old Democrat is calling for an end to what he describes as a tax loophole that allows New York City private equity firms, hedge funds and venture capital firms to keep several hundred million dollars a year in their coffers instead of giving it to the tax man.

“The city and state should work together to close the Unincorporated Business Tax’s carried interest loophole — one of many tax policies at the federal, state and city level that have contributed to an unfair system where middle-class New Yorkers pay more income tax than high-level private equity managers,” Stringer told The Post.

While pushing the measure through Albany will be difficult, sources said, changing the UBT the way Stringer envisions would be the second increased tax bite with the city’s wealthiest residents.

Mayor de Blasio’s plan to increase income taxes on those earning more than $500,000 a year — to 4.41 percent from 3.88 percent — would take an extra $1,500 a year from those earning $800,000, according to the city’s Independent Budget Office.

Stringer didn’t say if he would start pressing Albany immediately for the change, but he has long championed changing the tax laws for PE firms and their ilk. While serving as Manhattan borough president, he joined a union rally in 2008 outside KKR’s offices calling for PE firms to pay their fair share of taxes.

But that effort went nowhere because Mayor Bloomberg and Speaker Chris Quinn were against it, sources said. Now, with a bullier pulpit — and a mayor and council speaker more open to raising taxes — Stringer, at least, has allies in the battle.

Of course, getting Assembly Speaker Sheldon Silver and Gov. Cuomo to buy into the idea will be tough, a source said.

Many private equity firms, and some local hedge and venture capital firms, get around the UBT by exchanging the 2 percent management fees they receive from investors, which are taxable, for a percentage of profits, which are not.

PE firms have said the exchange is legal because they are trading under their own account. In exchange for forgiving fees, the firms collect 20 percent of profits on what would have been fee income.

Sometimes they are guaranteed a return on the waived fee even if the fund does not generate a profit, a source said.

Some firms, though, including Blackstone, do not convert their management fees into capital gains. They pay the 4 percent tax.

Meanwhile, the IRS is looking into the matter.

State Attorney General Eric Schneiderman in 2012 also opened an investigation into management-fee waivers, and, a source said, has been waiting for the IRS to make the first move.

Gregg Polsky, a University of North Carolina Law School professor, who has written a special report on PE firm fee conversions and the tax issue, said he believes the management fee waivers should be against the law.