U.S. PIRG pushes to keep alive carried interest tax increase


"We believe that this change without proper protection for the venture capital industry could undermine the ability of small businesses to create jobs and get the economy back on track," the letter states, adding, "A change in the carried interest provision could greatly reduce investment in our nation's emerging sectors."

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The bill looks to ultimately tax carried interest as ordinary income, which has rates that go above 39 percent. The compensation is now taxed at the 15 percent capital gains rate. The change is expected to raise $20 billion.

Tichon argues the current structure on carried interest is unfair to other workers. She points out that a single person earning between $8,375 and $34,000 is taxed at 15 percent. Hedge fund managers can earn up to $570 million in a good year, all of which would be taxed at 15 percent if the compensation was considered carried interest.

"No one wants to hurt venture capitalists – people who are actually investing their money," she said. "But for folks who are just performing a service and managing the money, we don't see that any differently than any other job. Why should one group be signaled out to get a tax break? That is hard to swallow."

Her group will be teaming up with other organizations in the coming few weeks to press senators into support the tax increase. 

"It's just the right thing to do," she said. "We don't really see it as a payfor, it's just sound policy."