For the first time in decades, conservative tax reform is on the horizon. There is broad agreement between Republican leaders in Congress as well as the White House that our current tax system is outdated, with unrealistically high tax rates that make it harder for businesses to grow and hire American workers.
Led by Rep. Kevin Brady, House Republicans have unveiled “A Better Way For Tax Reform,” a blueprint that overhauls the current patchwork of rates and rules that impedes economic growth. It features an across-the-board cut that will finally make the United States globally competitive with other countries that have a significantly lower tax rates and modernize our tax system in order to encourage American businesses to grow and hire workers right here at home.
Rep. Brady’s blueprint is just as important for what it doesn’t do. Namely, it does not change the tax treatment for long-term business investment, otherwise known as “carried interest.” Higher taxes on carried interest would discourage growth by raising the cost of doing business for companies that are major economic drivers – and it unfairly singles out investors in certain industries.
The cornerstone of the Brady tax plan is making sure that every American business and worker gets a fair shot, and that includes ensuring that certain investors are not arbitrarily punished. For years, carried interest has been singled out and mischaracterized as a tax loophole. It’s not. Carried interest meets all the criteria of capital gains – and it’s taxed the same way a homeowner would be taxed for profits made from selling their house or an investment property.
Now, more than ever, we need a tax reform package that bolsters long-term investment in American companies. Carried interest does just that, and Rep. Brady’s efforts to create a level playing field that promotes economic growth and new jobs for American workers should be applauded.