President Barack Obama will push to end the carried interest tax rate paid by private equity and other private fund managers as Washington lawmakers negotiate a new federal budget, Mr. Obama said Wednesday.
The current fiscal year ends Sept. 30, which could trigger a government shutdown if negotiations break down on a new budget.
In remarks to the Business Roundtable, a corporate CEO group, Mr. Obama said raising the carried interest rate “is an example of how we can maintain fiscal responsibility while at the same time making the investments we need to grow.
“I will tell you that keeping this tax loophole, which leads to folks who are doing very well paying lower rates than their secretaries, is not helping the American economy,” Mr. Obama said. The additional tax revenue would help the federal government increase job opportunities and help more people afford college, he said.
Mr. Obama noted that two Republican presidential candidates, Jeb Bush and Donald Trump, have also endorsed ending or raising the carried interest tax rate, along with members of Congress from both parties. Private fund managers would be subject to regular income tax rates instead.
James Maloney, spokesman for the Private Equity Growth Capital Council, disagreed that carried interest tax treatment is a loophole. “It is consistent with the treatment afforded to other long-term investments in capital assets and is founded on settled tax law. Disturbing this policy will have ramifications well beyond private equity funds,” including startup ventures, small businesses, real estate and natural resource investments, and other enterprises,” Mr. Maloney said in an e-mail.