How One Billionaire Saved a Huge Tax Loophole that Wall Street Loves
Hillary Clinton and Bernie Sanders have promised to close it. Donald Trump has decried it. Even Jeb Bush, when he was still in the race, wanted to get rid of it.
It's the carried-interest tax loophole, which allows money managers, particularly those in private equity, to pay the capital gains tax rate on the sale of the businesses they buy, transform, and re-sell.
The capital gains rate is supposed to be reserved for investments, and many — including the presidential front runners and President Obama — believe that even though investments are included in the private equity process, that process is, essentially, private equity's bread and butter. It's how these money managers make their income, so, many argue, it should be taxed like income.
Alec MacGillis, politics and government reporter for ProPublica, explores the past, present and possible future of the carried-interest loophole in his recent piece, "The Patriot: How Philanthropist David Rubenstein Helped Save a Tax Break Billionaires Love." As he tells The Takeaway, Rubsenstein helped coalesce Democratic support to save the loophole after President Obama took office, in early 2009.
