Domestic Taxes

Investment group blasts tax increase on carried interest

Earlier today, Senate Finance Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Sandy Levin (D-Mich.) announced a deal had been struck on the extender bill. 

A rough estimate shows the legislation will cost at least $200 billion, but only a portion of its measures will be offset. The tax increase on carried interest is expected to be a major revenue source to help pay for the bill. 

Under the legislation, sources told The Hill that carried interest for the first 2 years will be taxed at ordinary income and capital gains rates — a 50/50 split, which amounts to a tax rate of roughly 30 percent. That split changes to 75/25 after 2 years, which amounts to a 35 percent rate.

A score for this provision from the Joint Committee on Taxation has not been released. 

The bill is expected to go before the House Rules Committee later Thursday with a chamber vote on it tomorrow. 

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