Trump Takes Aim at Private Equity’s Favorite Tax Loophole Again 

(Bloomberg) — President Donald Trump is once again saying he wants to end a tax perk used by private equity fund managers, a policy feat that politicians have tried and failed to achieve for more than a decade.Most Read from Bloomberg Citadel to Leave Namesake Chicago Tower as Employees Relocate NYC Sees Pedestrian Traffic Increase in Congestion-Pricing Zone How London’s Taxi Drivers Navigate the City Without GPS Transportation Memos Favor Places With Higher Birth and Marriage Rates State Farm Seeks Emergency California Rate Hike After Fires Under threat: the tax code’s controversial treatment of the profits of private equity, venture capital and hedge fund managers. In the current regime, dealmakers pay a lower rate on their share of profits because these returns are taxed as capital gains instead of normal employment income.In a meeting with Republican lawmakers on Thursday, Trump said closing the carried-interest loophole is a priority. Such a shift could reduce the deficit by $13 billion through 2034, according to a December estimate from the Congressional Budget Office.Subscribe to the Bloomberg Daybreak podcast on Apple, Spotify or anywhere you listen.​​​​​​“President Trump will give us his priorities, but I can tell you the real priority is fixing this affordability crisis for the American people,” Treasury Secretary Scott Bessent said in an interview with Saleha Mohsin on Bloomberg Television Thursday. Administration officials were “just starting the process now” on tax policy, he said.Trump rode a wave of economic populism and widespread grievance about the cost of living into the White House, putting him on a collision course with a multitrillion-dollar industry that has built a slick lobbying machine around how it fuels jobs and growth.Both Democratic and Republican presidents have attempted to abolish the carried interest loophole, including President Joe Biden in 2022, but private equity interests have mounted fierce opposition.In the upcoming fight, the industry is expected to continue drawing on a playbook that has been honed over the years and argue that the current tax treatment of private equity profits is appropriate for a commitment of “sweat equity” with no guarantee of returns.In past fights, buyout giants have aggressively highlighted how their industry fueled mom-and-pop businesses in recent years. Private equity firms have taken senators to tour the businesses in their home states, making clear that jobs and local taxes were at stake. They’ve found private equity allies in organizations like the National Association of Manufacturers.“Private equity firms have worked to show carried interest aligns the interests of investors and managers,” said James Maloney, managing partner of Tiger Hill Partners, a government relations and strategy firm. “Policymakers need to weigh the benefit of tax revenue against the risk of major disruption to a longstanding investment model.”Vast SumsTher