Senate, Like House, Opts to Keep Tax Break for Rich That Trump Vowed to End
The Senate Finance Committee on Thursday adopted a provision similar to one included in the House’s tax plan
that would extend the minimum holding period for investments that qualify for the tax break, known as the carried-interest loophole, to three years from one.
The authors of the Senate’s proposed $1.5 trillion tax cut bill did no more than their House counterparts to
close a contentious tax loophole favored by managers of private equity firms and some real estate ventures.
Such profits are now taxed at a long-term capital gains rate of about 20 percent,
about half the rate at which top earners’ income would otherwise be taxed.
The term carried interest essentially refers to profits reaped by private equity executives and hedge fund managers for the services they perform.
Both the House and Senate plans have been criticized for delivering substantial tax cuts to wealthy people
and corporations at the expense of middle-class taxpayers, some of whom would pay more in taxes, mostly because of the elimination of certain deductions.
Three years is not an unusual holding period for private equity.”
The House approved the bill containing the provision Thursday.