Compromise on Tax Reform Strikes Balance on Carried Interest

As Republicans gather momentum and votes in Congress to enact a much-needed tax cut bill, they are running up against the politicians who see tax reform as a way of sharpening their rhetorical swords to engage in class warfare. One of the primary targets of the class warriors is the so-called “carried interest” tax provisions of the tax code. House Republicans led by Ways and Means Committee Chairman Kevin Brady (R-TX) has found a way to reform the tax while ensuring the investment will continue to flow into the economy.

Carried interest is the tax paid by members of partnerships when profits are distributed. It qualifies as capital gains and it is taxed at the 23.8 perfect rate rather than the nearly 40% income tax rate. For politicians like Bernie Sanders and Hillary Clinton, this constitutes a massive “loophole for the rich.” In fact, some liberals want to do



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