April 15, 2024

Manchin, Baldwin, Brown Lead Effort To Close Carried Interest Tax Loophole

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 of 2024 to eliminate a tax loophole that allows wealthy investment managers to evade paying their fair share of taxes.

The current carried interest loophole allows these money managers to pay the lower 23.8 percent capital gains tax rate on income received as compensation, rather than the ordinary income tax rates of up to 40.8 percent that they would pay for the same amount of wage income. According to the Treasury proposal, closing this loophole will raise $6.5 billion in revenue over 10 years.

“Currently, there is a loophole in our tax code that allows hedge fund managers to pay less in taxes for wage income than ordinary West Virginian and American workers, and these managers have taken advantage of it for far too long. Our commonsense legislation would close this loophole to ensure the wealthiest Americans are paying their fair share and contributing to our national economic growth rather than just their personal pockets. I urge my colleagues on both sides of the aisle to support this practical legislation that treats all workers fairly and moves to create a more equitable tax code,” said Senator Manchin.

“Hardworking Wisconsin families should not be paying more in taxes than the wealthiest Americans. But right now, our tax code has loopholes that allow super wealthy hedge fund managers to avoid paying their fair share,” said Senator Baldwin. “By closing the carried interest loophole, we’ll make our tax code fairer for working families, cut the deficit, and ensure that those at the top of the food chain aren’t exploiting the system to further enrich themselves.”

“This loophole is yet another way wealthy special interests have rigged the system to work for them, at the expense of everyone else. Hedge funds and private equity firms shouldn’t pay less taxes than working people in Ohio. This bill is a commonsense solution to promote fairness and make Wall Street pay its fair share,” said Senator Brown.

The Carried Interest Fairness Act of 2024 is supported by AFL-CIO, American Federation of State County and Municipal Employees, American Federation of Teachers (AFSCME), Communications Workers of America (CWA), Main Street Alliance, Patriotic Millionaires, Public Citizen, Small Business Majority, United for Respect, NETWORK Lobby for Catholic Social Justice, and National Women’s Law Center, Economic Policy Institute, 20/20 Vision.

“The carried interest loophole is one of the clearest examples of how the wealthiest rig the tax code in their favor,” said David Kass, Executive Director Americans for Tax Fairness. “Rich fund managers should not be allowed to pay a lower federal tax rate than registered nurses or powerline workers. Ending this loophole is a common sense win for tax fairness.”

In addition to Senators Manchin, Baldwin, and Brown, this legislation is also cosponsored by Senators Sheldon Whitehouse (D-RI), Chris Van Hollen (D-MD), Ed Markey (D-MA), Elizabeth Warren (D-MA), Mazie Hirono (D-HI), Amy Klobuchar (D-MN), Bernie Sanders (I-VT), Jack Reed (D-RI), Tim Kaine (D-VA), Peter Welch (D-VT), and Cory Booker (D-NJ).

The full text of the legislation can be found here.