Trump Promised to Kill Carried Interest. Lobbyists Kept it Alive.
Mr. Trump used to be one of those critics.
Two months after kicking off his campaign, Mr. Trump railed against hedge fund managers in an August 2015 interview for being “guys that shift paper around,” who were “getting away with murder” by not paying their fair share of taxes.
“They make a fortune, they pay no tax,” he said. “They have to pay taxes.”
A year later, in a speech at the Detroit Economic Club, Mr. Trump was more explicit about what he planned to do about it if elected.
“We will eliminate the carried interest deduction, well known deduction, and other special interest loopholes that have been so good for Wall Street investors and for people like me but unfair to American workers,” Mr. Trump said, incorrectly referring to the special treatment of carried interest as a tax deduction.
So what happened?
Gary D. Cohn, the director of the White House’s National Economic Council, said on Wednesday that the administration tried more than two dozen times to eliminate the carried interest loophole and that, as recently as this week, Mr. Trump asked why it was not gone.
Mr. Cohn, a former top Goldman Sachs executive, said opposition from lobbyists and lawmakers on Capitol Hill was intense and that the best that could be done was to extend the “holding period” for investments that qualify for the tax break to three years from one.
“The president strongly believes, and he ran on this, that carried interest is a loophole,” Mr. Cohn said at an event sponsored by Axios. He said the president continues to believe that venture capitalists and hedge fund managers are getting a preferred rate of return on someone else’s capital.
While the president managed to get much of what he wanted in the tax bill, including a lower corporate rate and a lower top individual rate, Mr. Cohn suggested that Mr. Trump had met his match when it came to those carrying water for carried interest.
“The reality of this town is that constituency has a very large presence in the House and the Senate, and they have really strong relationships on both sides of the aisle,” he said.