Industry Reaction
Eliminating the carried-interest tax advantage will “adversely affect the treatment of startup ventures, small businesses, interests in real estate and natural resources, and additional enterprises,” James Maloney, a spokesman for Private Equity Growth Capital Council, a Washington trade group.
Taxing as ordinary income the profits interest that private-equity managers receive in the companies they take over and manage would raise $17.7 billion over a decade, according to the Treasury Department. Those profits now are subject to a 23.8 percent top tax rate on gains rather than the 43.4 percent rate that applies to wages.
Obama said that revenue could be used to double the number of workers in job-training programs and aid millions of college students.
He said the administration is still in talks with Ryan and New York Democratic Senator Charles Schumer, who is poised to become the party’s leader in the chamber, on reworking the U.S. tax code.
The president also asked the business group to put pressure on Republicans to come to terms on a federal budget for the next fiscal year that will end the across-the-board spending limits put in place in an earlier deal.
Spending Caps
Obama wants Congress to lift spending caps that restrict the budget for domestic health, research and education programs. He has threatened to veto every spending bill Republicans have produced so far because they would provide less money for the government than he requested.
“If we don’t reverse the cuts that are currently in place, a lot of the drivers of growth that your companies depend on, research, job training, infrastructure, education for our workforce,” will shrink, he told the business leaders.
Obama also expressed confidence in completing the Trans- Pacific Partnership trade accord this year