By Megan Barth —— Bio and Archives January 31, 2017
Comments | Print This | Subscribe | Email Us
While it appears unlikely that incoming lawmakers and the administration will increase rates outright, they should also be sure not to incrementally move the needle toward higher capital gains taxes in other ways, like boosting taxes on carried interest capital gains. Carried interest capital gains income is earned through a net gain within a partnership formed between individuals with capital and an expert investor. They are indistinguishable from any other type of capital and so they are paid at the same capital gains tax rates.
While supporters of higher taxes on carried interest capital gains say it takes aim at 'hedge fund guys,' it would also hurt pension funds, charities, and colleges that depend on these investment partnerships as part of their savings goals. In addition, small businesses would find themselves increasingly shut out from investment money available to them from these partnerships. Rather than supporting proposals that lead to higher capital gains tax rates, the incoming Congress and administration should look toward lower rates. One model to follow is contained in the House GOP blueprint, which reduces the top rate on capital gains to 16.5 percent."For over 100 years, carried interest has been treated as capital gains and since it does not distort or deviate from normal tax rules and principles, it cannot rightfully be considered a loophole. If carried interest is earned when an investor sells a capital asset for a profit and after holding it for more than one year— it is, by definition, a capital gain and should be taxed as such. Raising capital gains taxes will hurt all Americans, not just the “rich guys.” President Trump and Congress have set a goal of massive tax reform that will benefit Americans and help businesses create new jobs and innovations. Any tax increase that specifically targets private equity, venture capital, real estate and other long-term business investments is counterproductive to reaching that goal. The best way to lower budget deficits is to lower taxes, which will free up the money that our economy needs to help make America great again.
Megan Barth, is co-chair of RedWave America PAC and The Media Equality Project. She serves as national spokeswoman for MediaEqualizer.com, the leading online watchdog for the intersection of Media, Technology and Government. .