by Jenny Surane
Private equity’s favorite tax break is back in President Donald Trump’s crosshairs.
Trump on Thursday told Republican lawmakers he wants to end the carried interest exemption used by legions of private equity fund managers and venture capitalists around the country, arguing it could be used to offset the multitrillion-dollar tax cut Republicans plan to pass before the end of the year.
The move was reminiscent of Trump’s first term, when the President unsuccessfully tried to abolish the loophole in his landmark tax overhaul legislation.
“President Trump will give us his priorities, but I can tell you the real priority is fixing this affordability crisis for the American people,” Treasury Secretary Scott Bessent said in an interview with Saleha Mohsin on Bloomberg Television Thursday. Administration officials were “just starting the process now” on tax policy, he said.
The carried-interest tax break allows private equity managers and venture capitalists to pay lower rates on their earnings from the investments they make. White House Press Secretary Karoline Leavitt told reporters that Trump also wants to end what she cast as “special tax breaks for billionaire sports team owners” as part of the sweeping tax bill this year.
It’s no secret that Trump dislikes the carried interest tax break and he made getting rid of the loophole a feature of his 2016 presidential campaign. But he didn’t highlight any such plans on the campaign trail this time around.
In his first term, Trump’s key advisers were split about removing the controversial rule. That ultimately gave Republican lawmakers an opening to ignore the president’s wishes, Bloomberg News reported at the time.
Carried interest is the portion of an investment fund’s returns that are paid to fund managers, which is treated as capital gains, meaning it’s currently eligible for a tax rate of 20% on sales of assets held for at least a year. Meanwhile, the top marginal rate on wages is 37%.
Copyright Bloomberg News
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