06.23.16

U.S. Senator Tammy Baldwin Hosts Press Conference with Representative Sander Levin, Patriotic Millionaires to Call for Action to Close Carried Interest Tax Loophole

Investment fund managers join in call to end tax loophole for millionaires and billionaires

WASHINGTON, D.C. – Today, U.S. Senator Tammy Baldwin (D-WI) and U.S. Representative Sander Levin (D-MI) were joined by the Patriotic Millionaires, a group of more than 200 wealthy Americans dedicated to addressing our nation’s economic inequality, to call for action in Congress to close the carried interest tax loophole.

Click here to watch the video of today’s press conference.

“Instead of simply rewarding the wealthy with tax preferences, Washington needs to do more to respect hard work, invest in economic growth, and give the middle class a fair shot at getting ahead,” said Senator Baldwin. “Today, we were joined by investment fund managers who are calling for Congress to close a loophole that they themselves can take advantage of. It’s past time to eliminate this loophole and make sure those at the top are paying their fair share.”

“The carried interest tax loophole is a vivid example of the unfairness in our nation’s tax code,” said Rep. Levin. “Some of the wealthiest Americans who invest others’ money are getting away with paying a lower tax rate when there’s no good reason. Senator Baldwin and I have introduced legislation to close this loophole – an idea backed by Republicans and Democrats alike – and with the support of the American people, I am optimistic our efforts will ultimately prevail. It’s long past time we end this $15 billion tax break to fund managers and work together to make the tax code fairer for all Americans.”

The Carried Interest Fairness Act, introduced by Senator Baldwin and Representative Levin, has continued to receive broad bipartisan support from government officials, economists, investors and hedge fund managers. At today’s press conference, Senator Baldwin and Representative Levin were joined by members of Patriotic Millionaires, including Morris Pearl, Chair of the Patriotic Millionaires and former Managing Director at BlackRock, and Art Lipson, a hedge fund manager and member of Patriotic Millionaires.

"Investment managers such as myself earn carried interest as a fee for their labor in handling financials, just as plumbers, doctors, or teachers earn income for their labor every day. Except, unlike any other profession, investment managers pay a lower capital gains tax rates on money earned from this labor—a rate that can be as little as half of what every other American is paying,” said Patriotic Millionaire Art Lipson, Principle of Western Investment. “The only explanation for why I, as a manager of partnerships, pay a lower rate on the money I make, is our corrupted tax code. It's time to end the carried interest tax loophole and move towards a more fair tax system.”

"There is no more striking example of the cost of corruption than tax loopholes that benefit the 1 percent of the 1 percent. At a time when wages for working people have stagnated at 1990 levels, it is an outrage for a small group of fund operators to have their income taxed at a lower rate. Closing the carried interest loophole would be an important step toward a more economically equitable America,” said Morris Pearl, Chair of the Patriotic Millionaires and former Managing Director of BlackRock, Inc. "It's indefensible. It's a loophole that everybody from Donald Trump to Hillary Clinton knows should be closed."

The carried interest loophole allows certain investment fund managers to take advantage of the preferential 20 percent tax long-term capital gains rate on income received as compensation, rather than the ordinary income tax rates of up to 39.6 percent that all other Americans pay. The Joint Committee on Taxation estimated that closing the carried interest loophole through the Carried Interest Fairness Act would raise more than $15 billion in revenue.

There has been broad support from government officials, economists, investors, and editorial boards for closing the carried interest loophole. Read some of those statements here.