Wyden, Whitehouse file bill to end carried interest

Senator Ron Wyden (D-OR), Chairman of the U.S. Senate Finance Committee, and Senator Sheldon Whitehouse (D-RI) re-introduced the “Ending the Carried Interest Loophole Act” on August 5, 2021. The bill, S. 2617, would recharacterize a carried interest, or promote, as ordinary income. 

Unlike carried interest proposal introduced by Senator Tammy Baldwin (D-WI) and Representative Bill Pascrell (D-NJ), Wyden’s bill would also require developers to include a “deemed compensation amount” annually in their tax returns. 

Congressional Democrats are looking for ways to pay for their proposed $3.5 trillion spending bill. Congress is likely to begin consideration of that legislation this fall. The Wyden bill is estimated to raise $63 billion over 10 years, whereas the Baldwin/Pascrell proposal would raise $15.6 billion.

ICSC has been lobbying Congress to preserve the long-standing capital gains tax treatment of carried interest. The proposals would discriminate against entrepreneurs who utilize equity financing for projects and would reduce the propensity to take on projects with the greatest risk, such as affordable housing or new commercial developments in underserved communities.

Text of the Wyden legislation is available here.

 A one-pager summary of the legislation is available here.

 A detailed summary of the legislation is available here.