While former President Donald Trump has long enjoyed strong support from Republican lawmakers, one of his tax proposals is facing pushback from within his own party. Trump has repeatedly expressed his intention to eliminate the carried interest tax loophole—a stance that puts him at odds with Wall Street lobbyists and some GOP lawmakers.
According to The New York Times, the proposal to close the loophole has triggered a significant lobbying effort to prevent it from moving forward. “President Trump has been trying to eliminate the tax loophole, which benefits Wall Street, but Congressional Republicans may stand in the way,” the report states.
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The carried interest rule allows hedge fund managers, private equity executives, and venture capital firms to pay a tax rate of roughly 20% on their profits, significantly lower than the standard income tax rate. The provision has faced criticism from figures across the political spectrum, including billionaire investor Warren Buffett, who has argued that the rule unfairly benefits the wealthy.
The report notes that efforts to preserve the tax break are intensifying. “One Washington lawyer described the lobbying effort to DealBook as ‘significant,’ a sign of the escalating stakes,” the report states. Meanwhile, private equity firms are preparing for a major battle, recognizing that Trump’s plan threatens their bottom line.
“They’ll fight tooth-and-nail on any sort of change,” said Jessica Millett, a tax partner at Hogan Lovells, according to The New York Times. Trump’s opposition to carried interest represents a rare divide between him and Republican lawmakers, many of whom have traditionally defended tax policies that favor financial executives.
“Trump’s disdain for carried interest is a rare fracture between him and Republican lawmakers,” the report explains. Historically, Democratic lawmakers have led efforts to eliminate the loophole. When Trump recently renewed his push to close it, congressional Democrats—not Republicans—were the first to introduce stand-alone bills to support the change.
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However, Trump’s stance may be starting to shift GOP attitudes. “Trump may finally be eroding G.O.P. unity,” the report states. Republican Senators John Cornyn of Texas and Thom Tillis of North Carolina, both members of the Senate Finance Committee, have recently indicated that they are open to considering changes to the carried interest rule.
With Wall Street lobbyists, Republican lawmakers, and Trump’s own party pulling in different directions, the fate of the carried interest loophole remains uncertain. If Trump pushes forward, he could force a rare policy debate within his own ranks, potentially reshaping the GOP’s long-standing approach to tax policy.
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