President Trump is proposing to eliminate a fiscal escape that is also a long time from some Democratic legislators.
Trump is working on “There are no taxes on the social security of the elderly, without taxes on the payment of overtime”, as well as to renew the tax cuts in the 2017 tax and job reduction law, said the secretary Press of the White House, Karoline Leavitt, on January 6. But. , he added, the president also wants to abolish the “lagoon of the deduction of interest taxes carried.”
The last tax exemption may not be well known to many Americans, since it is predominantly used by coverage funds, private capital companies and other types of investment funds. This Loophole allows investment administrators to greatly reduce their taxable income, an important advantage for investors whose annual profits can increase billions.
The interest carried out refers to the income that investment managers raise from their funds, which is generally 20% of profits. According to the current fiscal law, this income is taxed as a capital gain, which has a higher tax rate of 20% for long -term profits, compared to the highest rate of 37% for regular income, such as money that workers receive in their payment checks.
“The tax escape of interests carried is one of the clearest examples of our two -level tax system,” said David Kass, executive director of the US Fiscal Defense Group for fiscal equity, in an email to CBS Moneywatch. “Average Americans cannot reduce their fiscal burden by half without reason, but the rich and well connected can.”
Aligned with the Democrats
Mr. Trump’s proposal to eliminate the deduction of interests aligns it with the objectives of democratic legislators, many of whom have tried to eliminate escape. More recently, Senator Tammy Baldwin, Wisconsin Democrat, and another 13 legislators on Thursday inserted The Law of Justice of Interests carried out, which would increase the tax rate of investment funds, led to the same rates paid by workers with their income.
Eliminating Wall Street tax exemption could help increase tax revenues by approximately $ 100 billion during the next decade, according to a New analysis From the Committee of a Federal Responsible Budget (CRFB), a defense group focused on tax matters. That would only partially compensate the high -range tax cuts that Mr. Trump is proposing, that CRFB estimates will cost almost $ 5 billion in the next 10 years.
Mr. Trump’s proposal is receiving a rejection of Wall Street, with the American Investment Council Commercial Group urging the new administration to preserve tax exemption.
“We encourage the Trump and Congress Administration to maintain this fiscal policy solid and unleashed more long -term investments that support jobs, workers, small businesses and local communities,” said Drew Maloney, CEO of the American Investment Council, in a Declaration to CBS Moneywatch.
The private capital industry has invested more than $ 5.6 billion in the United States economy from the Trump’s tax and tax reduction law of 2017, Maloney said.
Finishing the escape would put investment administrators in the same tax base as middle -class workers, said Kass of Americans for fiscal justice.
“The time for repeal is very late,” Kass said. “We cannot allow gaps as they persist as income inequality and wealth continues to intensify.”
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