Sen. Sanders’ (I-Vt.) and Secretary Clinton’s calls for higher taxes on private equity funds are to be expected in a Democratic primary. In the minds of their campaign advisers, that’s how they appeal to the party’s base. But why is Donald TrumpDonald John TrumpIG investigating Comey memos over classified information: report Overnight Defense: Congress poised for busy week on nominations, defense bill | Trump to deliver Naval Academy commencement speech | Trump administration appeals decision to block suspected combatant's transfer Top Pruitt aid requested backdate to resignation letter: report MORE proposing similar measures to hike taxes on carried interest – which would hammer private equity firms – as part of his tax reform package? And, why would Sen. Ted CruzRafael (Ted) Edward CruzCruz's Dem challenger slams Time piece praising Trump Race for Republican Speaker rare chance to unify party for election 32 male senators back Senate women's calls to change harassment rules MORE (R-Texas), speaking at a campaign rally in Charleston, South Carolina, recently lament that “hedge fund billionaires pay a lower rate than their secretaries”?

These types of proposals and rhetoric might be temporarily expedient in some political settings, but treating carried interest as ordinary income is not a recipe for economic growth, nor will it make the tax code more efficient. Sanders and Clinton may not have these goals first in mind with their tax policy agendas, but Trump and Cruz certainly should.

For starters, many of the simplistic calls for higher taxes on carried interest ignore the basic compensation structure of private equity funds. The general partner in the limited partnership private equity fund is subject to the so-called “two and twenty” rule. Essentially what this means is the general partner receives two percent of the total assets under management of the limited partnership for his or her day-to-day activities. This is taxed as ordinary income.  The “twenty” means the general partner receives 20 percent of the capital gains (if any) beyond the initial investment, which is taxed up to the maximum of 23.8 percent top long-term capital gains rate. In other words, the general partner is paying wage income tax on his salary, as most of us do, and also paying the capital gains rate on his or her share of investment gains of the limited partnership.

Congress has established a lower rate for long-term capital gains for several reasons, among them the fact that longer term investments are riskier and also costlier to hold onto for the investor. It makes sense that the after tax return, therefore, should be higher, given these realities. Furthermore, the levy can act as a “double tax,” since the earnings that went into the investment were already taxed at ordinary rates. It’s also important to remember that unlike federal taxes on “ordinary” income, capital gains taxes are not indexed for inflation. Investors can get taxed on phantom returns.

Next, why should the tax code treat similar investors differently depending on how they’re incorporated? Treating carried interest as regular income would only apply to general partners in limited partnerships. Individuals and corporations engaging in the same activity would not see a higher rate under any plan to treat carried interest as ordinary income. It’s worth noting that this inconsistency shows up quite plainly in Cruz’s tax reform plan, which would cut the top rates by more than half but not for everyone.

Beyond the issue of arbitrariness in tax treatment, treating carried interest as ordinary income would hammer investments. While there are many types of private equity funds employing a variety of investment strategies, there is no question these types of investments have helped support innovative startups and provided critical capital to entrepreneurs. As Mary Petrovich, an operating executive at The Carlyle Group, noted in The Hill recently, "[In 2014] alone, private equity drove over $480 billion into the U.S. economy and is responsible for saving jobs, turning around companies, and helping companies grow." Do we really want less innovation and growth just to satiate the appetites of pandering politicians and class warriors?

Finally, raising taxes on carried interest is not a cash cow its proponents claim it to be. Estimates vary slightly, but this ill-conceived tax hike would yield between $15 and $20 billion in additional federal revenue over the next ten years. With the Congressional Budget Office forecasting revenue to top $42 trillion over the next decade, it’s clear that a higher tax on carried interest is not a budgetary panacea.

Conservatives should let Sanders and Clinton corner the market on bad tax policy cloaked in ugly class warfare rhetoric. Embracing higher taxes on carried interest will lead to weaker investments and will not seriously make a dent in the national debt. Conservatives ought to know this.

Packard is Policy and Government Affairs manager at the National Taxpayers Union.