CEI is in opposition to proposals that would raise taxes on carried interest investment income.
Dear Members of Congress,
We the undersigned organizations write in opposition to proposals that would raise taxes on carried interest investment income.
Carried interest is a share of profits earned by general partners of private equity, venture capital, and real estate. General partners in a firm are paid as if it were a return on their investment rather than ordinary income and are taxed as a capital gain as such.
We urge Congress to reject the misnamed “Carried Interest Fairness Act,” legislation recently reintroduced by Senators Tammy Baldwin, Elizabeth Warren, Bernie Sanders, and other progressive members of Congress. This
legislation that would increase the tax rate on carried interest investment by 70%, from 23.8% to 40.8%.
Similarly, Nancy Pelosi and House Democrats attempted to raise taxes on carried interest in their partisan Build Back Better legislation, as did President Joe Biden in his budget proposals. The 2024 Democratic Party Platform also called for raising taxes on carried interest.
This latest tax hike on carried interest would raise taxes by an estimated $6.5 billion over the next decade while discouraging investment, reducing economic growth, and growing the size of government.
This legislation reflects the longstanding agenda of some to tax all capital gains as ordinary income. Taxing carried interest is the opening salvo in this effort.
On principle, carried interest should be taxed as capital gains and not at artificially higher rates.
The tax treatment of carried interest is not a “loophole” as some have long mischaracterized. In fact, the current tax treatment of carried interest is an intentional, pro-growth feature of the tax code for more than 100 years that incentivizes risk-taking and entrepreneurship, benefiting investors, public pension funds and retirees.
A 2021 study analyzing venture capital funds found that changing the tax treatment of carried interest “to ordinary income rates would significantly reduce the attractiveness of forming a new fund.” A higher tax rate limits the availability of affordable investment options for American workers and retirees.
We urge you to oppose the misnamed “Carried Interest Fairness Act” and reject similar proposals that would raise taxes on carried interest investment income.
Instead of hitting American investors and companies with massive tax hikes, Congress should focus on making the pro-growth tax cuts from the 2017 Tax Cuts and Jobs Act permanent and reducing wasteful government spending.
Onwards,
Grover Norquist
President, Americans for Tax Reform
Saulius “Saul” Anuzis
President, American Association of Senior Citizens
Phil Kerpen
President, American Commitment
Ryan Ellis
President, Center for a Free Economy
Daniel J. Mitchell
President, Center for Freedom and Prosperity
Jeffrey Mazzella
President, Center for Individual Freedom
John Berlau
Director of Finance, Competitive Enterprise Institute
Matthew Kandrach
President, Consumer Action for a Strong Economy
Tom Schatz
President, Council for Citizens Against Government Waste
Cameron Sholty
Executive Director, Heartland Impact
Alfredo Ortiz
Chief Executive Officer, Job Creators Network
Brandon Arnold
Executive Vice President, National Taxpayers Union
John Tamny
President, Parkview Institute
Gordon Gray
Executive Director, Pinpoint Policy Institute
Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council
David Williams
President, Taxpayers Protection Alliance
Steve Pociask
CEO, The American Consumer Institute
James Taylor
President, The Heartland Institute
James L. Martin
Founder/Chairman, 60 Plus Association