Mnuchin pledges to fight carried interest loophole in tax-reform plan

Mnuchin pledges to fight carried interest loophole in tax-reform plan
© Greg Nash

Treasury Secretary Steven Mnuchin on Monday said the Trump administration plans to pressure Congress to close a tax code loophole that allows managers of some types of private investment funds to pay a lower tax rate than most individuals.

Fox News host Tucker CarlsonTucker CarlsonSunday shows - Buttigieg warns supply chain issues could stretch to next year Bill Kristol: Buttigieg entitled to call Tucker Carlson a 'repulsive bigot' Paid family leave is 'not a vacation,' Buttigieg says MORE pointed out during an interview that the current GOP tax-reform plan includes the carried interest loophole, which critics say overwhelmingly benefits the wealthy, and asked the secretary if he plans to push lawmakers to do away with it in markups.

Mnuchin responded, "We are."

"I’m sure that’s one of the issues will be debated as it gets through the House and as it gets to the Senate and we’ll be working with both parties on," he said on "Tucker Carlson Tonight."

The rule tends to apply to the managers of certain types of private investment funds like hedge funds, private equity and venture capital firms, real estate companies and others who receive an investment rate that is nearly half what other individuals pay.

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Retail and home building groups have expressed opposition against the possibility of closing the loophole, which could mean eliminating the mortgage interest deduction.

Mnuchin said their plan took the mortgage concerns into account in the House version of the bill.  

"Well, we’ve preserved in the House version a $500,000 mortgage that you can deduct the interest. That’s an awfully big home in mostly every single part of this country. So, I think we were very sensitive to that and we’ve preserved it and as you said, we’re cutting out lots of loopholes throughout the whole tax plan," he said.

"So there will be people who don’t like bits and pieces but people understand, this is a pass-fail exercise. It’s critical to the economy and we’re going to get it done," the secretary continued.

On Monday, GOP lawmakers started the contentious markup process of the tax legislation as their Democratic colleagues slammed the proposal for providing tax cuts for wealthy individuals and corporations while cutting tax breaks for the middle-class.

Democrats took aim at Mnuchin for violating his own rule that he won't pass a measure that would provide a net tax benefit for the rich.