“Carried Interest Fairness Act” Introduced

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.”