The House and Senate are filling in the specific provisions of the $3.5 trillion budget resolution they agreed to in August.  The new spending will be paid for with tax increases, including an unnecessary and harmful tax on carried interest.

The Internal Revenue Code has treated carried interest as capital gains income for more than 100 years.  In 2017, the holding period for these gains was increased from one to three years, and that should remain the only change in its treatment. 

The impact of this new tax would be felt by the thousands of small businesses that rely on private equity and venture capital investments, along with small real estate and affordable housing projects that rely on real estate partnerships.  These investments also offer a higher return than the other investments that are included in the pension funds of retired public employees, including firefighters, police officers, and teachers. 

Taxpayers should not be fooled by claims that this is a “wealth tax.”  It would be harmful to workers, businesses, and retirees, and come at a time when the nation can least afford new taxes.

Resources:
Congress Should Not Impose a Damaging Small Business Tax
Beware of the Words “Investment” and “Free”
Coalition Opposes Tax Hikes
Study: Raising Taxes on Carried Interest Capital Gains Will Eliminate 4.9 Million Jobs
Americans Oppose Taxing Unrealized Gains by an Overwhelming 3-to-1 Margin
NTU Opposes Tax Hike on Carried Interest
Builder Associations Oppose Carried Interest Tax Reform
NMHC Urges Congress to Oppose Crippling Tax Increases