WASHINGTON, DC - Ways and Means Committee Ranking Member Sander Levin (D-MI) today issued a statement following President Obama’s remarks at a meeting of the Business Roundtable calling on Republicans in Congress to close the carried interest loophole and improve our economy:
“The President is correct that the Republican Majority must make it clear that they will not shut down the government and bring our nation to the brink of default again in the next weeks. The potential damage to our economy is clear. It is also clear that bipartisan agreement grows on the issue of closing the carried interest loophole, with support announced recently from Republican Presidential candidates.
“We should act on the bicameral legislation, which is similar to the legislation approved in the House on numerous occasions and supported by the President. Income is income - whether it is earned by a construction worker or a fund manager - and should be taxed the same way. This is fair and equitable and represents the type of revenue necessary to balance our budget and grow our economy."
In June, Rep. Levin and U.S. Senator Tammy Baldwin (D-WI) introduced the Carried Interest Fairness Act, legislation that 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.
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.
The House has passed legislation to address the carried interest loophole on four occasions, the most recent being in 2010, as an amendment to the Senate-passed Unemployment Compensation Extension Act of 2010.
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.
