'Partners in private equity firms and hedge funds who generally manage other people's money get a share of the profits from any deal they do - often about a 20% share, even if they have invested any of their own money in it,' said David Wessel, an economics fellow at the Brookings Institution, in an interview with NPR. How does the loophole work, and what have Democrats proposed? Some of the richest Americans have made their fortunes by earning carried interest, especially through private equity funds,' said Steve Rosenthal, a fellow at the Urban Institute's Tax Policy Center, in an interview with NPR. The long-standing provision has survived repeated attempts and promises to eliminate it, from Democrats and Republicans alike. taxes what is called 'carried interest,' a major way that many fund managers and private equity investors earn their compensation.īut it has long been controversial because this kind of income is currently taxed at a much lower rate than the salary most Americans earn from ordinary jobs. history.Ībout $14 billion meant to fund those efforts would come, Democrats say, from a change to the way the U.S. The legislative compromise, reached last week by Senate Majority Leader Chuck Schumer and West Virginia Democrat Joe Manchin, could represent the single largest federal clean energy investment in U.S. Tucked inside the sprawling Senate compromise bill for climate change and health care is an effort, years in the making, to close what Democrats say is a loophole that benefits a handful of the richest Americans: the carried interest tax.

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