'Get it done': Democrats want Trump to eliminate Wall Street tax break he's long targeted
WASHINGTON – A group of Democratic senators is calling on President Donald Trump to push congressional Republicans to end a Wall Street tax break he has long had in his sights.
In a letter sent to Trump on May 18 and first obtained by Paste BN, 10 Democratic senators highlighted the president's longstanding interest in eliminating what's known as the "carried interest loophole." It's a tax break that allows venture capital, private equity and hedge fund managers to pay a lower tax rate for certain earnings than they would if it was taxed as regular income.
Investment fund managers pay 23.8% tax on carried interest, which is the profits they make from assets like stocks and bonds. Even though it makes up most of their earnings, it's treated as a return on investment rather than typical income, which is taxed at 37% for the country's top earners. Trump campaigned on eliminating the tax break in 2016, telling CBS News that the financiers are "getting away with murder."
"A lot of them, it's like they're paper pushers. They make a fortune, they pay no tax. It's ridiculous," he said at the time.
But Trump couldn't get the change included in his 2017 economic legislation, the Tax Cuts and Jobs Act, amid an intense lobbying campaign from the industry and some GOP lawmakers to protect the break. Wall Street voices say the provision allows them to support more jobs and makes them more competitive around the world.
Now that Republicans in Congress are crafting a new sweeping tax and spending package, Trump is again pushing congressional leaders to eliminate the carried interest advantage.
In the initial version of the bill released on May 12, House lawmakers left it out, meaning the loophole would survive.
"It is clear that the private equity industry has fought hard to retain these extraordinary tax giveaways," the Democratic senators wrote in the letter to Trump. "What is less clear is whether you will allow your party to deviate from your commitments, bow to industry demands, and fail to close the loophole for a second time."
The letter, led by Sens. Elizabeth Warren of Massachusetts and Tammy Baldwin of Wisconsin, was also signed by Sens. Chris Van Hollen, D-Maryland, Sheldon Whitehouse, D-Rhode Island, Jeff Merkley, D-Oregon, Ron Wyden, D-Oregon, Amy Klobuchar, D-Minnesota, Jack Reed, D-Rhode Island, Peter Welch, D-Vermont, and Bernie Sanders, I-Vermont.
The senators wrote that the House's tax-writing committee "defied your wishes" by advancing legislation that doesn't eliminate the loophole. "So, Mr. President, will you get it done?" they asked.
The letter prods at a rare point of overlap between Trump and some of the most progressive congressional Democrats and a break between the president and Republicans in Congress. In addition to leaving out the carried interest provision, lawmakers have not adopted Trump's proposal of raising taxes on some of the wealthiest Americans to offset lost revenue from his other tax cuts.