Latest news with #carriedinterest
Reuters
4 days ago
- Business
- Reuters
JPMorgan's Dimon says US should tax carried interest, CNBC reports
May 30 (Reuters) - JPMorgan Chase (JPM.N), opens new tab CEO Jamie Dimon said at the Reagan National Economic Forum that the U.S. should be taxing carried interest, CNBC reported on Friday. The comment from the biggest U.S. bank's top boss comes at a time when U.S. President Donald Trump has also been hinting at closing the carried interest loophole. Carry, which refers to the part of private fund managers' compensation tied to profits generated, is currently taxed as a long-term capital gain. This has enabled fund managers to pay lower taxes than on ordinary income.
Yahoo
23-05-2025
- Business
- Yahoo
GOP bill cuts social spending—but popular tax break for hedge funds survives
When Republicans passed Donald Trump's 'big, beautiful' tax bill on Thursday, they included provisions to partially offset the costs, including significant cuts to Medicaid and food stamps. One area lawmakers didn't touch: the so-called carried interest loophole that offers beneficial tax treatment to wealthy private equity, venture capital and hedge fund managers. The carried interest loophole refers to a provision in the U.S. tax code that allows investment fund managers, like private equity executives, to pay a lower tax rate than normal, everyday workers. Private equity firms typically raise outside capital from investors like pension funds, insurance companies and high net worth individuals. They use this money, called the fund, to invest in companies, frequently taking control of these businesses. PE executives usually receive a share of the profits—the carry—for managing investments. When a PE fund sells an asset, likely a portfolio company, at a higher price than what they bought, PE execs get carry. If the asset is sold after three years, the profit is taxed at a long-term capital gains rate of 20%. If they sell the business before the three years, the carry is taxed at a short term capital gains rate of 37%. The problem is that the 20% tax rate is lower than what many everyday U.S. workers pay. A couple filing jointly, making under $206,700, faces a 22% tax rate, while a single person who makes under $197,300 is taxed at 24%, according to 2025 tax brackets. Meanwhile, many finance executives' hefty salaries place them in the top 35% or 37% tax brackets—so the 20% carried interest loophole represents both a special perk for fund managers, and foregone tax revenue for the federal government. Carried interest has been a perennial hot button issue. For roughly the past 20 years, lawmakers, including President Barack Obama, Sen. Elizabeth Warren (D-Mass.) and even Trump himself, have called for carried interest to be changed so that it is be treated as ordinary income. Several bills have been introduced, including one from Sen. Tammy Baldwin (D-Wis.), who in February wanted to tax carried interest at the same rate that ordinary workers pay on their income. Trump, when he first ran for president in 2016, vowed to change the carried interest loophole but didn't follow through. Instead, his tax bill from 2017, the Tax Cuts and Jobs Act, made it harder to qualify for long-term capital gains rates of 20%. The 2017 law changed the holding period from one year to three years, which means PE firms must own an asset for three years before they can sell and have the profit taxed at the long-term capital gains rate of 20%. Trump also spoke to Republican lawmakers about changing carried interest in February but took no action. On Thursday, the Trump-endored tax bill passed by the House doesn't mention carried interest. This means that the changes imposed by Trump's 2017 Tax Cuts and Jobs Act, which made it harder to secure long-term capital gains, remain in place. 'The President's 2017 law struck the right balance on carried interest, and we're pleased that the new legislation will encourage more long-term investment across America,' said the American Investment Council, lobbyists for the PE industry, in a statement to Fortune Thursday. 'What came out of the House this morning doesn't affect carried interest. The current carried interest will stay,' added Mark Leeds, a tax partner at law firm Pillsbury Winthrop Shaw Pittman. It's still too early for private equity to claim victory. The tax bill will now head to the Senate, which will likely make modifications before the legislation is handed to President Trump to sign. 'It's possible the Senate could still make changes to carried interest,' Leeds said. This story was originally featured on
New York Times
09-05-2025
- Business
- New York Times
Trump Softens on Raising Taxes on the Rich, Saying G.O.P. Probably Shouldn't
President Trump on Friday publicly softened his private push on House Republicans to raise taxes on wealthy people and scrap a tax break that benefits private equity executives as part of a megabill to carry out his agenda. 'The problem with even a 'TINY' tax increase for the RICH, which I and all others would graciously accept in order to help the lower and middle income workers, is that the Radical Left Democrat Lunatics would go around screaming, 'Read my lips,' the fabled Quote by George Bush the Elder that is said to have cost him the Election,' Mr. Trump wrote on his social media website, Truth Social. 'Republicans should probably not do it, but I'm OK if they do!!!' Mr. Trump on Wednesday had privately urged Speaker Mike Johnson to create a higher tax bracket for those making more than $2.5 million a year. He also said he supported closing what is known as the carried interest loophole, which allows hedge fund, private equity and venture capital executives to pay taxes of only about 20 percent on their profits, which is about half the top income tax rate. The request further complicated Republicans' job as they toil to put together a domestic policy bill they hope to push through Congress this year. Divisions within the party over potential cuts to Medicaid and other popular social programs to pay for it, and which tax reductions to include, have delayed the drafting of the package and threaten to sap support for it. And Mr. Trump's abrupt and sometimes fleeting demands for the bill have hung over the talks, with G.O.P. lawmakers reluctant to cross him but uncertain of where he will ultimately stand. Mr. Trump is not constitutionally eligible to run for another election, unlike President George H.W. Bush, who was famously accused of breaking his campaign pledge not to impose new taxes. But Republicans are already facing blowback over Mr. Trump's first four months in office, well ahead of the midterm congressional elections. And many do not want to take a vote that would be used by Democrats as a weapon against them. Mr. Trump did not entirely walk away from his tax demand in the social media post. But he left himself an out should Republicans balk.
Yahoo
08-05-2025
- Business
- Yahoo
Trump urges Speaker Mike Johnson to raise taxes on the wealthy, adding new wrinkle to massive GOP bill
WASHINGTON — President Donald Trump privately pressed Speaker Mike Johnson, R-La., during a phone call on Wednesday to add two additional proposals to the massive package for his agenda: raising the tax rate on the highest earners and closing the so-called carried interest loophole, according to a Republican leadership source as well as two other GOP sources familiar with the call. The 11th-hour requests from Trump add a new wrinkle to an already complicated process for Republican lawmakers as they desperately try to find enough savings for the bill, which seeks to extend the president's 2017 tax cuts, boost funding for immigration enforcement and defense, and raise the debt limit. The White House has kicked around the idea of hiking the top tax rate for the wealthiest Americans for the past few months, and it now believes it is close to finalizing a topline number for the bill, according to one of the GOP sources familiar with the call. The other GOP source familiar told NBC News that Trump is considering allowing the rate on individuals making $2.5 million or more annually to revert from 37% to the pre-2017 39.6% as a way to help pay for middle and working class tax cuts and protect Medicaid. Punchbowl News was first to report the Trump-Johnson call. While Republicans have previously floated the idea of allowing tax rates to go up on top earners when major parts of the 2017 tax law expire at the end of this year, GOP leaders have been resistant to a tax hike on the wealthy, traditionally anathema within the party. Trump also shot down the idea of increasing taxes on millionaires last month, saying it would be "disruptive." 'You'll lose a lot of money if you do that,' Trump said at the time. 'And other countries that have done it have lost a lot of people. They lose their wealthy people. That would be bad, because the wealthy people pay the tax.' But with Trump pushing Johnson to reverse course, and House Republicans struggling to make the math work for their massive bill, leadership is now reconsidering its options. One senior House Republican closely involved in the negotiations confirmed to NBC News that there has been revived talk inside the House GOP conference over the last 24 hours about potentially allowing the top tax rate to go up, as well as closing the carried interest loophole. When asked how seriously these new proposals are being taken, the House Republican told NBC News: 'At this point we have to find the savings, so I think everything is being taken under consideration.' The tax-writing House Ways and Means Committee is planning to mark up its portion of the reconciliation bill next week, but is still sorting through a number of thorny issues, such as how to raise the cap on the state and local tax deduction, or SALT. House GOP leaders are aiming to pass the final package on the floor before Memorial Day, which is an ambitious timeline. This article was originally published on
Yahoo
08-05-2025
- Business
- Yahoo
Trump urged Speaker Johnson to raise top tax rate, source says
WASHINGTON (Reuters) -U.S. President Donald Trump privately urged House of Representatives Speaker Mike Johnson during a phone call on Wednesday to raise the top tax rate and close the carried interest loophole in upcoming legislation, a person familiar with the conversation said on Thursday. Trump and Johnson spoke as the Republican-controlled House sought to advance the president's legislative agenda, which would extend his 2017 Tax Cuts and Jobs Act for businesses and individuals, while eliminating taxes on tip income, overtime pay and Social Security benefits. Johnson and other top Republicans have resisted the idea of increasing the tax rate on wealthy Americans up until now. Treasury Secretary Scott Bessent told reporters last week that Trump had ruled out the idea. But the party has remained under pressure from Trump's populist MAGA supporters to limit tax breaks for wealthy individuals and businesses. Representative Jason Smith, who chairs the tax-writing House Ways & Means Committee, said in a recent interview that his panel could close tax loopholes that benefit the rich.
