House Dems Revive Carried Interest Bill

On April 18, Democratic Representatives Bill Pascrell (NJ-9), Don Beyer (VA-8) and Katie Porter (CA-47) introduced the “Ending Wall Street Tax Giveaway Act” (H.R. 2686).

The bill would end the capital gains treatment of carried interest, or “the promote” as it is called in real estate. It is identical to legislation previously introduced by Pascrell in 2021.  

ICSC strongly opposes this legislation as it would increase taxes on real estate partnerships, discouraging investment in development projects that create new jobs, grow the local tax base and make communities better.

Carried interest is the sponsor’s contractually agreed upon share of proceeds from a project, received after the investors have been paid a predetermined rate of return. It is not guaranteed and is justified based on the real risks associated with creating a successful shopping center, including recourse on debt, unforeseen environmental remediation, permitting delays and tenancy guarantees.

Under decades of established tax law, the nature of the carried interest – short or long-term capital gain or ordinary income – has been determined at the entity level and applied equally to all partners. The proposed changes to carried interest would disproportionately impact real estate partnerships that cannot access public markets and rely on capital from outside investors to fund their projects.

For more information about this issue contact Phillips Hinch, ICSC Vice President of Tax Policy, at 202-626-1402 or phinch@icsc.com.