Every President Since 2008 Promised to Close the Carried Interest Loophole
Ron Wyden filed four tax bills in one week. The bills will not become law. That is not a reason not to file them.
Every president since 2008 has promised to close the carried interest loophole. Every president since 2008 has failed. Ron Wyden just introduced the bill to close it. Again.
Obama campaigned on it in 2008 and 2012. The loophole survived eight years of his administration. Trump said it was on the table in 2017. His tax law extended the required holding period from one year to three and called it reform. The preference itself stayed intact. Biden’s Inflation Reduction Act had carried interest reform written in. Kyrsten Sinema killed it in conference. Trump said in February 2025 he wanted to end it. It is April. The loophole is still there.
The loophole is the rule that lets hedge fund and private equity managers pay capital gains rates (about 20%) on money most workers would pay ordinary income rates on (up to 37%). The managers call it performance compensation. The tax code calls it investment income. That difference, on fund incomes that routinely run into nine figures, is the reason Wyden has been filing the same bill for roughly fifteen years.
On Thursday April 16, he filed it again. Whitehouse and Angus King led the introduction with him. Cosponsors: Warren, Sanders, Smith, Lujan, Reed, Hirono, Fetterman, Markey, Schatz, Blumenthal, and Van Hollen. The Joint Committee on Taxation scored the Wyden-Whitehouse version at $63 billion in revenue over ten years. Earlier bills that only re-characterized the income type without closing the deferral came in at $15.6 billion. The extra $47 billion is the piece every prior bill left on the floor.
Same week, Wyden filed three others. The Modernization of Derivatives Tax Act, which would tax derivatives each year on paper gains, the way wages are taxed. The Getting Rid of Abusive Trusts Act, co-sponsored with Angus King, which would tighten the Grantor Retained Annuity Trusts that Ray Madoff calls the ultra-wealthy’s favorite estate tax exit. The Protecting Proper Life Insurance from Abuse Act, aimed at the private placement structures the very rich use to park hundreds of millions tax-free.
Four separate mechanisms. Each one names an exit the code leaves wide open.
Ray Madoff, the Boston College tax law professor (no relation to the other one), has spent two decades studying the exits. Her new book, The Second Estate, argues the American tax code has effectively become two tax codes. One for wage earners, where taxes come out at source and there is nowhere to hide. One for the ultra-wealthy, where taxes are optional, deferral is structural, and the estate tax has been gutted to the point that the largest fortunes in history are now transferring intact between generations for the first time since the Gilded Age. Ezra Klein aired her interview Friday. The New York Times ran her video op-ed on Bezos’s effective tax rate the same day, titled “Salaries Are for Suckers.” The argument landed in a tax-filing week. The audience finally arrived.
Here is the part where cynicism matters, because the cynicism is the accurate read.
Wyden’s four bills will get press coverage for a week. Some may get committee hearings. None of them will become law this Congress. The carried interest loophole has survived Obama, Trump, and Biden. Nothing about the current Senate math suggests it survives any less well under a Congress whose majority donors include exactly the people these bills target.
That is why they keep getting filed.
Every time someone says “we should close the loopholes” in a campaign speech, the ones at the top of the list need to be named. Sitting in the Finance Committee. With cosponsors. With JCT scores. With a bill number. Ready for a vote that will not happen.
This is what functioning opposition looks like when the votes are not there. You name the exits. You file the bills. You put the score on the table. You make the people who vote it down do so on the record, not in the shadows. You write the thing the next administration will dust off when the political math temporarily changes, which it will, which is how the Inflation Reduction Act happened to contain most of the components of a 2009 climate bill that died.
None of that is satisfying. Satisfying is not what the work is. The work is keeping the exits named when almost nobody else bothers to.
Four bills this week. Same loophole. Same outcome. Same reason to file them anyway.
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