For almost as long as this website has been around, it has been writing about the impending death of the carried-interest loophole. It has been a priority of administrations Democratic and Republican, pretty much rhetorically in the latter case but rhetorically important, all the same, because it seems like such an obvious fix, directed as it is against rich and politically unpopular hedge and private equity fund managers to close what looks like an incredibly unjust windfall, being taxed on the money they earn for earning other people money at a much lower rate than the money earned by, say, their janitors for keeping their offices clean. And, best of all, it’d be almost entirely symbolic, both because it wouldn’t really raise very much in revenue and because everyone knows the aforementioned rich and politically unpopular hedge and private equity fund managers will find some other way to avoid paying the full freight on the millions and billions they earn each year.
And for all of that time, the carried-interest loophole survives, unkillable, because it is prized by rich and therefore politically powerful hedge and private equity fund managers. As, we are sure, it will again, because while we were dead wrong about the last massive tax overhaul’s chances of becoming law, we’re quite sure this one is even more dead in the water.
The retroactive tax increase on capital gains will be difficult to get through Congress in its current form given Democrats’ thin majorities and lawmakers’ rare history for raising taxes without giving people a fair warning…. Democrats will likely have to scale back some of the ideas to be able to pass them through their razor-thin majorities in Congress. Some Senators, including Joe Manchin of West Virginia and Mark Warner of Virginia, have expressed concerns about Biden’s corporate tax rate and capital gains plans….
The Greenbook also details other previously announced proposals, including one to impose taxes at death on inherited property for large gains accrued during the previous owner’s lifetime. The proposal would also prevent private-equity and hedge fund managers from applying the long-term capital gains tax rate to their portion of the fund’s profits, known as carried interest, if their overall taxable income exceeds $400,000.