An amendment on Monday to the tax bill winding its way through the U.S. House of Representatives appears to fulfill President Donald Trump’s promise to close the so-called carried-interest loophole private-equity firms enjoy while also preserving many of the benefits they derive from it, the Wall Street Journal reported. Since his days on the campaign trail, Trump has made repeated pledges to tax investment gains known as carried interest as ordinary income, which would do away with a rule allowing investment managers to pay a lower rate on a substantial portion of their compensation. Private-equity firms have pushed back, arguing that paying the lower long-term capital gains rate affords them an incentive to take investment risks that benefit the economy. Monday’s changes to the bill by House Ways and Means Committee Chairman Kevin Brady (R-Texas) would extend the period over which firms must hold an asset before it is eligible for the long-term capital gains rate, to three years from one. While that may hurt some hedge funds, private-equity firms, which tend to hold assets for longer, would be largely unaffected.
