America First brigade rode to the rescue on carried interest loophole

America First brigade rode to the rescue on carried interest loophole
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During his time in the White House, Steve Bannon was infamous for using a whiteboard to track all of President Trump's campaign promises to help him deliver on those promises in office. On the top left corner of the white board read a promise made repeatedly on the campaign trail to nix the carried interest loophole.

For those that don't know, the carried interest loophole in the tax code allows hedge funds and private equity to treat their profits from investments as long-term capital gains, rather than income. In other words it allows their profits to be taxed at a much lower rate than they would be otherwise.

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While most America First conservatives (including myself and President Trump) would like to see significantly lower tax rates for all, the president correctly pointed out that financial elites have routinely abused the carried interest loophole.

 

Instead of using it as a means to make long-term investments, hedge funds and other entities often use the benefit solely as a way to shield their taxable income.

Long-term capital gains tax rates were not meant to be used and abused by hedge funds looking to make a quick dollar; they were meant to encourage long-term investment. The president's opposition to it on the campaign was a signal that financial elites would no longer run roughshod over the American people or our tax code.

I was excited to see House Ways and Means Chairman Kevin BradyKevin Patrick BradyDemocrats seize on IRS memo in Trump tax battle Oil companies join blitz for carbon tax Microsoft, other business leaders head to Capitol Hill in support of carbon tax MORE (R-Texas) include a fix to the carried interest loophole in the House version of the tax bill. With this fix, investors will have to hold onto their investments for a minimum of three years before being allowed to use carried interest and thus receiving the lower long-term capital gains tax rate.

This fix got to the heart of the president's original opposition to carried interest: that it was being constantly abused. And upon announcing the carried interest fix, it didn't take long for the president's most trusted America First campaign aides to come out in support of the idea. 

His former campaign manager Corey Lewandowski praised Brady for the move and even Bannon praised the fix. In his statement in support of the fix, Bannon got to the heart of the matter:

“I have long called for the elimination of the carried interest loophole but I believe that the proposal in the House tax bill requiring investments be held for a minimum of 3 years to qualify for capital gains is a good way of eliminating short-term financial engineering that benefits no one, while encouraging long-term investments that create good paying jobs.”

President Trump, Bannon and Lewandowski all understand the need for long-term investments to create good-paying jobs, but all of them also understand the difference between that and the short-term financial engineering that benefits no one besides those doing it. 

This proposed fix allows for the former and ends the latter. Fortunately, shortly after Bannon and Lewandowski came out in favor of the deal, leadership in the Senate followed suit and announced that they too would support it.  

While some financial elites might not like it, by fixing the carried interest loophole, President Trump is making good on his number one promise to the American people: to always put them first. 

Andrew Surabian is a senior adviser to Great America Alliance, a pro-Trump advocacy organization. He is a former special assistant to President Trump, serving as a strategist for Stephen Bannon. He also worked on Trump's campaign.