Representative Tom Cole of Oklahoma, a member of the House Budget Committee since 2011, said that higher taxes on carried interest should be part of congressional budget negotiations.
In an interview with Bloomberg Television’s Al Hunt that aired over the weekend, Cole said that striking a budget deal before a December 13 deadline means “everybody gives something up.”
Earlier this month, President Obama signed legislation to fund the federal government through January 15, and extended the nation’s borrowing authority until February 7, meaning Congress could find itself locked in another budget battle early next year. To help avoid that, the bill also assembled a committee of Democrats and Republicans from both chambers of Congress to reconcile differences between House and Senate budget proposals by December 13.
The previous GOP House budget plan spent about $90 billion less than the favored Democratic Senate plan. The White House’s 2014 budget proposal estimated that changing the tax treatment of carried interest to ordinary income from capital gains would create $16 billion in tax revenue for the government over the next ten years.
Various bills to change the tax designation on carry to ordinary income (which stands at 39.6 percent for top earners) have been put forward repeatedly over the past six years, but none have garnered enough support to become law. However, some commentators believe that as lawmakers become concerned with the government’s rising deficits, Congress may consider an adjustment to carried interest’s tax treatment as one way to generate more revenue.
“Again, we’re $90 billion apart. I doubt we’ll end up in the Republican number or the Democratic number if we have a deal, but if we can’t come to a deal, the law specifies sequester numbers,” said Cole. “And I don’t think that’s where the president wants to be. That’s not where we want to be.”