WASHINGTON, D.C. – As Americans mark Tax Day 2024, U.S. Senator Sherrod Brown (D-OH) introduced the Carried Interest Fairness Act today to eliminate a tax loophole that benefits wealthy money managers on Wall Street. The current carried interest loophole allows investment managers to often pay roughly half the tax rate that most other Ohio workers’ pay. Brown was joined by U.S. Senators Tammy Baldwin (D-WI) and Joe Manchin (D-WV) in leading this legislation.
“This loophole is yet another way wealthy special interests have rigged the system to work for them, at the expense of everyone else. Hedge funds and private equity firms shouldn’t pay less taxes than working people in Ohio. This bill is a commonsense solution to promote fairness and make Wall Street pay its fair share,” said Brown.
The carried interest loophole allows investment managers to pay the lower 23.8 percent capital gains tax rate on income received as compensation, rather than the ordinary income tax rates of up to 40.8 percent that they would pay for the same amount of wage income.
The Carried Interest Fairness Act will require carried interest income to be taxed at ordinary wage rates. According to the Treasury proposal, closing this loophole will raise $6.5 billion in revenue over 10 years.
In addition to Brown, Baldwin, and Manchin, this legislation is co-sponsored by U.S. Senators Sheldon Whitehouse (D-RI), Chris Van Hollen (D-MD), Ed Markey (D-MA), Elizabeth Warren (D-MA), Mazie Hirono (D-HI), Amy Klobuchar (D-MN), Bernie Sanders (I-VT), Jack Reed (D-RI), Tim Kaine (D-VA), Peter Welch (D-VT), and Cory Booker (D-NJ).
Full text of this legislation is available HERE.
