Business

GOP adds new limit on investor ‘carried interest’ break to tax bill

by Niv Elis - 11/06/17 6:50 PM ET

House Ways and Means Chairman Kevin Brady (R-Texas) on Monday offered an amendment to the GOP tax plan that includes a change to the so-called carried interest loophole.

The amendment would increase the holding period for eligible investments to three years, up from one. Earlier in the day, Brady told CNBC that it would increase to two years.

{mosads}The carried interest loophole refers to the portion of investment fund profits paid to certain fund managers and investors, which are taxed at capital gains, instead of ordinary income tax, rates.

As a result, the rate can drop from as high as 39.6 percent to as low as 23.8 percent.

Because the loophole tends to benefit the very wealthy, it has been a regular punching bag for politicians on the campaign trail.

Both Democrat Hillary Clinton and Republican Donald Trump vowed to close the loophole during the 2016 campaign.

By increasing the holding period to three years from one, the amendment seeks to reduce the amount of investment eligible for the lower rate.

Tags Capital gains tax in the United States Donald Trump Hillary Clinton Income tax in the United States Kevin Brady