Legislation

Opinion: Dems talk hiking taxes on private equity & hedge fund managers; GOP has done it

Patrick Gleason

Politicians from both sides of the aisle have talked for years about wanting to raise taxes on the income generated by hedge fund and private equity managers commonly referred to as carried interest, which is taxed at the capital gains tax rate. Despite what Wall Street had feared, it turns out unified Democratic control of the federal government will not translate into a tax hike on hedge funds and private equity firms. That’s because removal of a tax increase on carried interest from the Inflation Reduction Act (IRA) was the cost of getting Senator Kyrsten Sinema’s (D-Ariz.) vote for the bill.

“We did not raise taxes. We’ve closed loopholes. … I made sure there were no tax increases in this whatsoever,” Sen. Joe Manchin (D-W.V.) said of the IRA, which is a verifiably false statement. Not only does the IRA include hundreds of billions of dollars in federal tax hikes, the nonpartisan Joint Committee on Taxation reported that the IRA will result in a higher federal tax burden for households of all income levels, even for those making less than $10,000 annually.