Tax Cuts on Trump's Agenda Targeting Hedge Fund Deduction
President Trump met with Republican lawmakers to prioritize tax cuts, targeting the carried interest deduction favored by hedge fund managers, according to White House Press Secretary Karoline Leavitt.
Leavitt outlined "the tax priorities of the Trump administration," including a promise to eliminate the carried interest tax deduction loophole. Trump expressed his commitment to collaborating with Congress on this initiative.
The move, if implemented, could potentially align Trump with Democrats but faces skepticism from some GOP colleagues. It would also provoke intense lobbying from the hedge fund industry and private equity firms that have benefited from the deduction.
The carried interest deduction allows investment managers to pay lower capital gains taxes on their compensation. Private equity giants like Apollo Global Management, KKR, and Blackstone experienced market declines following the announcement.
Trump has previously pledged to eliminate the deduction, but those efforts have not materialized. Democratic Senator Tammy Baldwin and Representatives Marie Gluesenkamp Perez and Don Beyer have also introduced a bill addressing the issue.
However, securing support within Trump's own party may prove challenging. Senate Majority Leader John Thune played a pivotal role in blocking a previous attempt to close the loophole in 2022.