Jeb Bush has been forthright in saying he would end this preferential treatment and has released a comprehensive and specific plan to move toward a more level playing field on taxes. He has been clear in making the case for getting rid of special-interest deals and trying to balance the treatment of Wall Street and Main Street. Unlike some of the Democratic efforts, such as Sen. Tammy Baldwin (D-Wis.) and Rep. Sander Levin’s (D-Mich.) proposed “Carried Interest Fairness Act,” which is not a comprehensive tax plan and targets only investment fund managers, Bush’s plan to eliminate carried interest is not some punitive measure aimed at taking down Wall Street; it’s a common-sense measure that appeals to calls for fairness in the context of big tax reform. And in a world where a bumper sticker beats an essay, at the end of the day, how can Republican candidates defend carried interest when it enables a hedge fund manager to pay a lower tax rate than someone working as his or her landscaper?
To be fair, Donald Trump’s tax plan does also mostly get rid of carried interest, but as with most things Donald Trump, his tax plan is mostly bluster and goes too far to be considered reasonable. Marco Rubio’s tax plan outline makes provisions for eliminating carried interest, although not explicitly, but his plan has been repeatedly criticized for its unrealistic promises. And Hillary Clinton, who would end the carried interest provision through the punitive, President Obama-approved “Buffett Rule,” doesn’t even have an issue position specifically for taxes or tax reform on her campaign Web site, which makes it difficult to analyze her overall tax plan for Americans unless you are studying the fine print.
Anyway, both Republicans and Democrats have avoided putting the issue of carried interest in the crosshairs for years, but this could be the year when support for carried interest takes a meaningful dive. I think it is inevitable, especially because of how Jeb Bush has taken a lead in promising to eliminate that provision. In tonight’s economic debate on Fox Business Network, I hope the moderators will ask the candidates to comprehensively explain their tax reform plans and, more specifically, ask each candidate what they will do about carried interest as part of big tax reform. The hedge funds and financial players have powerful political allies, and they do a lot to fund both parties. It will be interesting to see which candidates will be ready to follow Bush’s lead and present and defend a clear position, and who will try to hide.