President Trump has been trying to eliminate the tax loophole, which benefits Wall Street, but Congressional Republicans may stand in the way.
Nearly a month has passed since President Trump last spoke publicly of his desire to kill the carried interest loophole. (Yes, we know, some of you don’t consider it a “loophole.”) And yet the private equity industry, which stands to lose big if the president upends the tax break, is still bracing for a fight.
This is the biggest challenge to the provision since it was nearly neutered three years ago under former President Joe Biden, Grady McGregor writes for DealBook.
A reminder: the carried interest rule means that executives at hedge funds and P.E. and venture capital firms pay roughly 20 percent tax on their profits, a rate that’s so low it’s drawn criticism from Warren Buffett and from progressive senators like Elizabeth Warren, Democrat of Massachusetts.
One Washington lawyer described the lobbying effort to DealBook as “significant,” a sign of the escalating stakes.
Consider what’s happened in the past month: The American Investment Council, the private equity lobbying group, is reportedly circulating memos on Capitol Hill reminding lawmakers that private equity is a jobs creator. Venture capitalists, seemingly omnipresent in Trump’s Washington, grumble that they have to keep returning to Congress to “educate lawmakers” about the rule’s benefits. So-called free market groups, meanwhile, have banded together to ask Congress to maintain the status quo.
“They’ll fight tooth-and-nail on any sort of change,” said Jessica Millett, a tax partner at Hogan Lovells.