In 1913, the US decided to have two types of taxes on money. One was an income tax on labor and another called a capital gains tax. The concept was that by having a lower rate for investment, it would spur additional investment in the economy. Andrew Keen: Where does this inequity in the tax code come from? Why does it exist?
Carried interest is a loophole in the United States tax code that has stood out for its egregious unfairness and stunning longevity.
Typically, the richest of the rich pay 40 percent tax on their income. The very narrow, select group that benefits from carried interest pays only 20 percent.
Earlier versions of the Inflation Reduction Act targeted carried interest. But the loophole has survived. Senator Kyrsten Sinema, Democrat of Arizona, demanded her party get rid of efforts to eliminate it in exchange for her support.
How has the carried interest loophole lasted so long despite its obvious unfairness?
Guest: Andrew Ross Sorkin, a columnist for The New York Times and the founder and editor-at-large of DealBook.
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