Ending the Carried Interest Loophole Act
Sen. Wyden Introduces Bill to End Tax Breaks for Wealthy Investment Managers
This bill is currently in the early stages of the legislative process after being sent to the Senate Committee on Finance for review. It is considered active, but there are no upcoming votes or hearings scheduled at this time. The bill is waiting for the committee to decide if it should move forward for a full vote.
Legislative Progress
This is a highly partisan issue that faces intense lobbying from the financial industry. While it has strong support from some Democrats, it lacks the bipartisan backing needed to pass a divided Senate.
Key Points
Impact Analysis
Personal Impact
Life & Work
Investment fund managers who operate as partners in private equity, hedge fund, venture capital, and real estate firms would see a significant tax increase on their carried interest income. Many of these fund managers structure their businesses as partnerships or LLCs, making them technically small business owners. Income that was previously taxed at the long-term capital gains rate (currently 20%) would now be reclassified as ordinary income taxed at rates up to 37%, potentially nearly doubling their effective tax rate on carried interest.
“there shall be included in the gross income of the taxpayer as ordinary income an amount equal to the aggregate of the deemed compensation amounts determined under subsection (c) with respect to such interests in all partnerships”
Activities
State Impacts
Milestones
Read twice and referred to the Committee on Finance.
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
2 articlesSenators reintroduce bills to boost IRS funding, close tax loopholes
The Ending the Carried-Interest Loophole Act (S. 4330) would tax carried interest as ordinary income and prevent re-characterization of income by requiring fund managers to recognize their annual compensation, targeting private equity and hedge fund executives.
Wyden targets carried interest in new tax bill
Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) introduced a bill with Sens. Sheldon Whitehouse and Angus King to end a tax break that allows fund managers to treat earned income as long-term capital gains, requiring them to report compensation as ordinary income each year.
Source Information
Document Type
Congressional Bill
Official Title
Ending the Carried Interest Loophole Act
Data Sources
Sponsor
Cosponsors
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