Trump Pushes for Sweeping Tax Overhaul, Targets Carried Interest Loophole

Washington D.C., January 10 - President Donald Trump's administration is proposing a tax overhaul that could boost revenue by $100 billion over the next decade and eliminate a long-time loophole favored by some of the nation's wealthiest investors.

The plan, which Mr. Trump unveiled recently, aims to abolish the "carried interest" tax deduction loophole. This lucrative perk allows investment managers to significantly lower their taxable income, saving billions in taxes. The move is seen as a major victory for Democrats, who have been pushing for its elimination for years.

"The carried interest tax loophole is one of the clearest examples of our two-tiered tax system," said David Kass, executive director of Americans for Tax Fairness. "Average Americans can't cut their tax burden in half for no reason, but the wealthy and well-connected can."

Senator Tammy Baldwin, a Democrat from Wisconsin, has introduced legislation to boost the tax rate on investment funds' carried interest to the same rates paid by workers on their income. Her proposal aims to close what critics see as a critical loophole allowing rich investors to avoid paying taxes.

Industry groups have resisted the move, however. The American Investment Council, which represents Wall Street firms, urged Mr. Trump and Congress to preserve the tax break, citing its benefits for long-term investment and job creation.

The carried interest loophole allows investment managers to collect 20% of profits from their funds and tax that income as a capital gain, which has a top tax rate of 20%. By contrast, regular income like wages are taxed at a higher rate of 37%.

Eliminating the loophole would not only boost tax revenue but also bring wealthy investors more in line with middle-class workers. Experts estimate that ending the carried interest deduction could save up to $100 billion over the next decade.

"It's long overdue," Kass said. "We can't allow loopholes like this to persist as income and wealth inequality continues to intensify."

The proposal is part of a larger tax overhaul package aimed at renewing cuts made in the 2017 Tax Cuts and Jobs Act, which saved companies billions of dollars in taxes. However, critics warn that Mr. Trump's proposals could end up costing nearly $5 trillion over the next decade.

Washington D.C., January 10 -