Bill 118 s 4123, also known as the Carried Interest Fairness Act of 2024, is a piece of legislation introduced in the US Congress aimed at addressing the issue of carried interest in the taxation of investment income. Carried interest is a share of profits that investment managers receive as compensation, typically taxed at a lower rate than ordinary income.
The main purpose of the Carried Interest Fairness Act is to treat carried interest as ordinary income rather than capital gains, thereby subjecting it to higher tax rates. This change is intended to ensure that investment managers are taxed at the same rate as other workers, promoting fairness in the tax system.
The bill has garnered support from lawmakers who argue that the current tax treatment of carried interest disproportionately benefits wealthy investment managers and contributes to income inequality. Proponents of the bill believe that taxing carried interest as ordinary income will help generate additional revenue for the government and reduce the tax burden on middle and lower-income individuals.
Opponents of the bill, however, argue that changing the tax treatment of carried interest could discourage investment and hinder economic growth. They contend that investment managers play a crucial role in allocating capital and driving innovation, and that taxing their compensation at a higher rate could disincentivize them from taking on risky investments.
Overall, the Carried Interest Fairness Act of 2024 is a contentious piece of legislation that seeks to address the disparity in tax treatment between investment managers and other workers. Its fate in Congress remains uncertain as lawmakers continue to debate the potential impact of changing the tax treatment of carried interest.