As Mitt Romney prepares to release his tax returns on Tuesday, all eyes will be on Schedule D, Capital Gains and Losses, so everybody can take a look at his carried interest income. I can hear teeth grinding already in buyouts land.
Clearly, Romney’s wealth, much of it taxed at advantageous capital gains rates thanks to carried interest, is going to be an issue as the 2012 election campaign progresses. Romney has already acknowledged that his effective rate is around 15%.
My colleague at Buyouts, Bernard Vaughan, will be taking a look at this in the next issue of our magazine. As Bernard notes in his article:
Since 2007, legislation that would raise taxes on carried interest has passed in the House of Representatives four times, but failed in the Senate. President Obama has repeatedly targeted carried interest as a revenue source, most recently in the jobs package he pushed last summer that failed to gain traction in Congress.
But all the renewed attention on carried interest—and the likelihood that it will continue for most of the year if Romney wins the Republican nomination—has some private equity executives wondering if the industry’s supporters in Congress will once again be able to safeguard its current tax treatment.
No spoilers here. I will note only that Sander Levin of Michigan, the ranking Democrat on the tax-writing House Ways and Means Committee, announced last week his intention to introduce legislation again this year to eliminate the tax preference on carry.
Of course, with the Tea Party still in control of the House and elections looming, we expect no action till the new Congress takes office in 2013. So dear readers, dust off your crystal balls and let is know what we should expect once the elections are over.
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Steve Bills is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @Steve_Bills. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at firstname.lastname@example.org.