Yale Budget Lab Says Carried Interest Crackdown Could Raise $88 Billion Over 10 Years
Updated
Updated · POLITICO · May 11
Yale Budget Lab Says Carried Interest Crackdown Could Raise $88 Billion Over 10 Years
2 articles · Updated · POLITICO · May 11
$88 billion in projected revenue over a decade is Yale Budget Lab’s new estimate for a Senate Democratic plan to tax carried interest more aggressively, well above the roughly $63 billion previously scored by the Joint Committee on Taxation.
Better data on how much of investment managers’ capital gains actually comes from carried interest drove the higher estimate, and the lab said its model includes behavioral responses despite uncertainty over partners’ profit shares.
The American Investment Council called the estimate wrong, arguing it assumes too little economic fallout and pointing to industry-backed research claiming repeal of the preference could cost up to 1.23 million jobs.
The fight matters because critics want carried interest taxed as ordinary income rather than at lower capital-gains rates, sharpening a tax-the-rich debate Democrats are expected to emphasize heading into 2027 and the next presidential race.
With tax revenue estimates varying by billions, how can policymakers accurately forecast the budget impact of new fiscal laws?
As states see billionaires exit over tax proposals, what prevents a federal wealth tax from triggering international capital flight?
A President suing the IRS for billions presents a unique conflict. What are the constitutional implications for executive power?