This tax loophole costs $180bn a decade.

Remember the “carried interest” loophole that lets hedge fund executives and private equity managers – among the wealthiest people in America – pay a tax rate no higher than most Americans? It’s a pure scam. They get the tax break even though they invest other peoples’ money rather than risk their own. Barack Obama promised to get rid of the loophole. He failed. So, remarkably, did Donald Trump. Now that Democrats are trying to find ways to finance President Biden’s Build Back Better package, you might think that the carried interest loophole would be high on their list. After all, closing it could raise $180bn over 10 years. Think again. The loophole – which treats the earnings of private equity managers and venture capitalists as capital gains, taxed at a top rate of just 20%, instead of income, whose top tax rate is 37% – remains as big as ever. Bigger. Influential Democrats, such as House ways and means committee chair Richard Neal, argue that closing the loophole would hobble the private equity industry, and, by extension, the US economy. The truth is there’s zero economic justification for retaining this loophole. The sole reason the loophole survives even during Democratic Congresses, is fierce lobbying by the private equity industry – and the dependence of too many Democrats on campaign funding from the partners of private equity and hedge funds. The private equity industry … has contributed hundreds of millions of dollars to congressional campaigns.

Note: For more along these lines, see concise summaries of deeply revealing news articles on government corruption from reliable major media sources.

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Author: {Want To Know}

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