Trump-O-Meter

Eliminate the carried interest loophole

"As part of this reform, we will eliminate the carried interest deduction and other special interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers."


Updates

Tax framework silent on carried interest

While running for office, President Donald Trump promised to get rid of a tax provision that he said he himself had taken advantage of — the carried interest "loophole."

"One thing I'd do is get rid of carried interest, one of the greatest provisions for people like me," Trump said at the second 2016 presidential debate. "To be honest with you, I give up a lot when I run because I knock out the tax code."

Carried interest refers to the profit earned by the general partner of a private investment fund. That income is currently treated as a long-term capital gain, which is taxed at a lower rate than ordinary income. Trump, in the past, has argued that the provision is unfair to American workers.

But so far the White House hasn't taken initiative to get rid of the provision.

The Trump administration's 2017 tax legislation framework made no mention of doing away with the carried interest tax break. When Face the Nation host John Dickerson asked House Speaker Paul Ryan about this Oct. 1, Ryan responded: "That's something that the committee's going to make a decision on."

White House officials have sent mixed signals about plans to end the provision. In August, U.S. Treasury Department Secretary Steven Mnuchin told reporters that Trump planned to keep the tax break for job-creating firms and end it for hedge fund managers. The day after the tax framework was released on Sept. 27, White House Economic Adviser Gary Cohn said Trump was still committed to completely ending the deduction.

Since the current tax plan doesn't include eliminating the loophole and Republican leaders are sending mixed messages, we'll rate this one Stalled.

Sources:

U.S. Treasury Department, 2017 tax code framework, Sept. 27, 2017

Politico, "Full transcript: Second 2016 presidential debate," Sept. 10, 2016

CBS, "Transcript: Paul Ryan on "Face the Nation," Oct. 1, 2017," Oct. 1, 2017

Bloomberg, "Mnuchin Hints at Keeping Carried Interest Tax Break for Some," Aug. 21, 2017

Bloomberg, "Cohn Says Trump Is Committed to Ending Carried Interest 'Loophole'," Sept. 28, 2017