May 12, 2021

Manchin Bill To Close Carried Interest Tax Loophole, Eliminate Tax Breaks For Wall Street Investment Managers

Senator Manchin’s legislation will eliminate private equity tax breaks and make wealthy fund managers pay ordinary income rates like workers do

Washington, DC – Today, U.S. Senators Joe Manchin (D-WV), Tammy Baldwin (D-WI), and Sherrod Brown (D-OH) introduced the Carried Interest Fairness Act, which would close the carried interest tax loophole that benefits wealthy hedge fund managers on Wall Street.

“For far too long, hedge fund managers working on Wall Street have not paid their fair share in taxes. Currently, there is a loophole in our tax code that allows investment managers to pay less taxes for wage income than the ordinary West Virginian and American worker. This legislation would close this loophole to ensure wealthy hedge fund managers are paying the fair amount in taxes. I urge my colleagues on both sides of the aisle to support this commonsense legislation that treats all workers fairly,” said Senator Manchin.

Currently, the carried interest loophole allows investment managers to pay the lower 20 percent long-term capital gains tax rate on income received as compensation, rather than the ordinary income tax rates of up to 37 percent that they would pay for the same amount of wage income. The Carried Interest Fairness Act will require carried interest income to be taxed at ordinary rates. According to the Joint Committee on Taxation, closing this loophole will raise $15 billion in revenue over 10 years.

The legislation is supported by AFL-CIO, The Agenda Project, American Family Voices, American Federation of Government Employees, American Federation of State County and Municipal Employees, American Federation of Teachers, American Postal Workers Union, Americans for Financial Reform, Catholics in Alliance for the Common Good, Center for Popular Democracy Action, Communications Workers of America, Consumer Action, Courage Campaign, Credo, Democracy for America, Economic Policy Institute, Franciscan Action Network, Friends of the Earth, Hedge Clippers, International Federation of Professional & Technical Engineers, Institute for Policy Studies, Media Voices for Children,, National Education Association, NETWORK, The Other 98%, Patriotic Millionaires, People's Action Institute,, Public Citizen, Service Employees International Union, Strong Economy for All Coalition, The Rootstrikers at Demand Progress, UNITE-HERE, U.S. Public Interest Research Group, United Auto Workers, Working America, and the Working Families Party.