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The Tax Loophole That Won’t Die

The Tax Loophole That Won’t Die

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Carried interest is a loophole in the United States tax code that has stood out for its egregious unfairness and stunning longevity.

Typically, the richest of the rich pay 40 percent tax on their income. The very narrow, select group that benefits from carried interest pays only 20 percent.

Earlier versions of the Inflation Reduction Act targeted carried interest. But the loophole has survived. Senator Kyrsten Sinema, Democrat of Arizona, demanded her party get rid of efforts to eliminate it in exchange for her support.

 

How has the carried interest loophole lasted so long despite its obvious unfairness?

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