"We've been clear about the carried interest rule and why that is simply bad policy and why it needs to be eliminated," Jay Carney, the White House spokesman, said Feb. 22. "It's simply not equitable if a hedge fund manager or a private equity executive pays tax on his or her income at a rate of 15 percent when average folks are paying much more."
The industry's advocacy group, backed by firms including Blackstone, Carlyle and KKR & Co., called the tax hikes "discriminatory and inequitable" because they targeted private equity specifically and not other kinds of partnerships. The firms have backed a multimillion-dollar lobbying effort to kill the increases, with Blackstone alone spending $5 million in 2011 petitioning Congress on issues including the tax treatment of carried interest.
The Obama administration added the language on the sale of businesses in its most recent budget proposal because it believes it is possible to enact carried interest legislation, said a Treasury official speaking on condition of anonymity to discuss the administration's rationale. The change, the official said, signals the administration's willingness to work out the issue.