Home / General / Could Obama Unilaterally End the Interest Tax Loophole?

Could Obama Unilaterally End the Interest Tax Loophole?

/
/
/
1081 Views

ac13fa2205eceebf9a77059e9ce698d7

This is certainly an interesting assertion:

In one deft move, Mr. Obama could instruct officials at his Treasury Department to close the so-called carried interest tax loophole that allows managers of private equity and hedge funds to pay a substantially lower federal tax rate on much of their income.

Forcing these managers to pay ordinary income taxes on the gains they reap in their funds would accomplish two things. It would take away an enormous benefit enjoyed almost exclusively by some of the country’s wealthiest people. And, tax experts say, it would generate billions in revenue to the government each year, though there are wide differences over exactly how much.

But doesn’t changing the carried interest loophole require an act of Congress? Not according to an array of tax experts. Just as Mr. Obama’s Treasury Department recently changed the rules to curb corporate inversions, in which companies shift their official headquarters to another country to lower their tax bills, the Treasury secretary, Jacob J. Lew, and his colleagues could jettison the carried interest loophole.

Alan J. Wilensky is among those urging such a change. He was a deputy assistant Treasury secretary in charge of tax policy in the early 1990s when the carried interest loophole came about.

“This is something President Obama can do and should do,” Mr. Wilensky said in an interview. “This is not an impossible thing to get done.”

Now a lawyer in Minneapolis, Mr. Wilensky recently wrote an article on this topic for Tax Notes, the definitive publication on national and global tax issues.

Victor Fleischer, a law professor at the University of San Diego, is another who has recommended that the Treasury get rid of the unjust tax treatment on carried interest. Mr. Fleischer, a contributor to The New York Times, has also estimated how much money such a change would bring to the Treasury.

“It’s something that Obama could accomplish and, to be honest, I’m not entirely sure why the Treasury hasn’t taken an interest in it,” Mr. Fleischer said in an interview. “In fact, there is quite a bit of revenue at stake. And doing this on carried interest would cement Obama’s legacy in substance as well as symbolically.”

I wonder if Obama hasn’t done this because he so holds the idea of a Grand Bargain near and dear to his heart and this would be a chip he could use in that deal. That’s sheer speculation of course. In any case, eliminating this would be a major boost to Obama’s legacy and he should do it yesterday.

  • Facebook
  • Twitter
  • Linkedin
This div height required for enabling the sticky sidebar
Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views :