U.S. Senator Tammy Baldwin Applauds President Obama’s Call to End Carried Interest Loophole
In June, Senator Baldwin and Representative Levin Introduced Bill to Repeal Carried Interest Loophole
WASHINGTON, D.C. – U.S. Senator Tammy Baldwin (D-WI) released the following statement after President Barack Obama today called for bipartisan work to repeal the carried interest tax loophole that has allowed wealthy investors to pay lower interest than average Americans.
“Keeping this tax loophole, which leads to folks who are doing very well paying lower rates than their secretaries, is not in any demonstrable way improving our economy,” President Obama said in remarks at a Business Roundtable meeting Wednesday in Washington.
In June, Senator Baldwin, along with House Ways and Means Committee Ranking Member Sander Levin (D-MI), introduced the Carried Interest Fairness Act of 2015. The legislation would end the carried interest loophole and ensure that income earned managing other people's money is taxed at the same ordinary income tax rates as that of the vast majority of Americans. According to the Treasury Department, closing the carried interest loophole would raise about $18 billion over a decade.
“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. “At a time when too many Wall Street millionaires pay a lower effective tax rate than some truck drivers, teachers and nurses, we need to eliminate this loophole and make sure those at the top are paying their fair share. I applaud today’s push from President Obama to highlight a tax reform measure that deserves more bipartisan support and action from Congress.”
The carried interest loophole allows certain investment fund managers – including private equity fund managers – to benefit from a tax loophole that allows them 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. This legislation clarifies that this income is subject to ordinary income tax rates rather than the much lower long-term capital gains rate.
“This is an example of how we can maintain fiscal responsibility while at the same time making the investments we need to grow,” President Obama said today.
Learn more about the Carried Interest Fairness Act of 2015 here.
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