Carried Interest Tax Change: Still Fait Accompli
The morning after Barack Obama was elected president, I wrote that the debate over carried interest taxation was effectively over. Obama had promised on the campaign trail to change the treatment of carried interest from capital gains to ordinary income -- which in most cases would raise the rate from 15% to 35 percent – and I saw little chance that he’d go back on that word. I also assumed that most people agreed with me, until the following exchange with NVCA chief Mark Heesen, during a 5 Questions here at peHUB: Dan: One of your big issues over the past two years has been tax treatment of carried interest. Is that still a big priority? Mark: I think it continues to be an issue, but you were dead wrong when, the day after the election, you basically said that a change to the carried interest tax was fait accompli. We got lots of calls after that column, saying “Oh my God.” We knew it wasn’t going to happen at that point. You’ll see it brought up again, but in this environment it’s very unlikely you’ll see Congress working on issues that are not huge revenue-raisers. They will not be out there trying to slap the wrists of people they shouldn’t be slapping the wrists of, because there are more important issues to work on at this point. Well, today's Wall Street Journal reports that Obama will indeed include the carried interest tax change as part of the budget blueprint being unveiled later this week.
