The Tax Loophole That Won’t Die

The Daily

The New York Times

News, Daily News

4.5 • 97.8K Ratings

🗓️ 15 August 2022

⏱️ 26 minutes

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Summary

Carried interest is a loophole in the United States tax code that has stood out for its egregious unfairness and stunning longevity. Typically, the richest of the rich pay 40 percent tax on their income. The very narrow, select group that benefits from carried interest pays only 20 percent. Earlier versions of the Inflation Reduction Act targeted carried interest. But the loophole has survived. Senator Kyrsten Sinema, Democrat of Arizona, demanded her party get rid of efforts to eliminate it in exchange for her support. How has the carried interest loophole lasted so long despite its obvious unfairness? Guest: Andrew Ross Sorkin, a columnist for The New York Times and the founder and editor-at-large of DealBook.

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0:00.0	From New York Times, I'm Michael Barrow. This is a daily.
0:07.0	For decades, a single loophole in the US tax code has stood out for both its egregious
0:20.6	unfairness and its stunning longevity. Today, my colleague Andrew Rossorgan on how that
0:30.8	loophole survived its latest brush with death.
0:44.0	This Monday, August 15th.
0:52.0	Andrew right after the Senate passed this landmark climate and prescription drug bill about
0:56.8	a week ago. We spoke with one of our colleagues in Washington, Emily Cochran about this long
1:02.2	dramatic journey required by Senator Joe Manchin of West Virginia to get behind it. But there
1:07.6	was another Democratic Senator who was the other real holdout during this process. And that's
1:13.8	Kirsten cinema of Arizona. And I want to talk to you about the very specific thing that
1:20.2	she did at the last minute that threatened to derail this historic legislation. Can you
1:25.9	tell us that story? Well, Senator cinema basically said, I'm holding up this entire bill
1:34.3	over one provision in it.
1:38.6	For his own, a Senator Kirsten cinema wants some changes to that major Democratic spending
1:43.0	bill in exchange for her vote.
1:45.2	She didn't want to include a plan that would have practically gotten rid of a big tax
1:51.7	loophole.
1:52.7	This is specifically for the richest business people in private equity, the people who make
1:58.2	hundreds of millions of dollars a year.
2:00.5	But benefits some of the wealthiest folks in the entire country.
2:05.7	She has for a while been skeptical of the measure that's in here that would aim to close
2:11.8	or tighten the carried interest loophole.
	...

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