Carried Interest Legislation Introduced

LEGISLATIVE TRACKER

The Small Business Investor Alliance informs and educates its members on the issues that impact their ability to invest, and works to promote public policies that help small businesses gain access to the capital that is crucial to U.S. economic growth and American job creation. 

 

February 16, 2021 (Washington, D.C.) – According to bill sponsors, the Carried Interest Fairness Act would close a tax loophole by taxing carried interest compensation at ordinary income tax rates and treating it as wage income subject to employment taxes. The capital gains break would apply for private equity partners who invest their own money in their funds, but all income from managing a firm’s assets would be taxed at ordinary rates. In making their case, the sponsors highlighted a Congressional Budget Office estimate that “closing the loophole will return $14 billion to American taxpayers over ten years, while experts have suggested it could bring in more than ten times as much to the Treasury.”

 

More on Carried Interest

In October 2021, the Small Business Investor Alliance (SBIA) filed formal comments with the Treasury Department on the proposed rulemaking by the Internal Revenue Service regarding guidance under section 1061 of the Internal Revenue Code on the tax treatment of certain partnership interests (i.e., “carried interest”) held in connection with the performance of services.

Read the formal comment letter >

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About the Small Business Investor Alliance (SBIA)

The Small Business Investor Alliance is the association of senior investment professionals focused on the lower middle market whose members represent the entire private capital ecosystem. It is an alliance for professional fellowship, business opportunities, innovation, regulatory expertise, and market data. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing small businesses. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for over 60 years. For more information, visit www.SBIA.org or call (202) 628-5055.

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