More than 50 organizations on Wednesday urged Senate leadership to support Sen. Tammy Baldwin’s Carried Interest Fairness Tax Act in the current budget negotiations. Baldwin’s bill would close the carried interest loophole exploited by hedge funds—a move backed by Republican presidential candidates Donald Trump and Jeb Bush as well as Democrat Hillary Clinton and Vermont Sen. Bernie Sanders.
In their letter, the 52 groups—which includes left-leaning groups like the AFL-CIO and Americans for Financial Reform – state that the Carried Interest Fairness Act, S. 1686, introduced by Baldwin, D-Wis., on June 25, would generate $15.6 billion over 10 years, according to the Joint Committee on Taxation.
Baldwin told Senate leaders in her October letter that in addition to President Barack Obama, closing the loophole has been proposed by Republican tax writers—including former House Ways and Means Committee Chairman Rep. David Camp, R-Mich.–and “prominent members of the investment management community.”
The Administration and Congress are now hashing over how to keep the budget funded after Dec. 11. Obama has said that he will not sign another short-term continuing resolution that’s currently funding the government until Dec. 11. Besides budget talks, Congress also must vote on whether to raise the debt ceiling by Nov. 5.
(Democratic presidential candidate Sanders, I-Vermont, is already a co-sponsor of Baldwin’s bill; Clinton, the current democratic presidential frontfronner, has also vowed to close the carried interest loophole).
Baldwin’s Carried Interest Fairness Tax Act would close a loophole allowing fund managers to classify their income as long-term capital gains, which is taxed at a top rate of 20%, instead of wage income, which is taxed at a top rate of 39.6%. (Neither number includes Medicare taxes on investments and wages.)