Schumer backs carried interest tax boost

New York Democratic Senator Charles Schumer is drafting legislation that would raise taxes on carried interest for all industries, published reports said. Mr. Schumer wanted to increase the carried interest tax for a variety of partnerships that use a “two-and-20” structure, such as real estate investment trusts, venture capital firms and energy businesses, rather than just limit the tax raise to private equity firms, Reuters reported. “He prefers this approach because it is broader, fairer and will raise more revenue than targeting only publicly traded partnerships,” Mr. Schumer’s spokesman Brian Fallon said to Reuters. The senator, who is also a member of the Senate Finance Committee, may pitch the bill when Congress returns from its summer recess in September. Congress is already weighing proposals that would bump taxes on carried interest as high as 35% —the rate for income tax—from the 15% capital-gains tax rate. Managers say that the carried interest is pegged to a fund’s profit and should be taxed as such, but critics argue that it’s a payment and should be taxed as ordinary income.