The White House released more than 7,800 words Wednesday morning describing the promises of President Joe Biden’s American Families Plan. It included not only a string of desired benefits—more free education, lower- and middle-class tax cuts, direct financial support, childcare, paid leave, and more—but also plans on how to help pay for it all.

The Peter G. Peterson Foundation, the eponymous group started by the Blackstone Group co-founder that focuses on fiscal sustainability, called the suggestions “thoughtful proposals” that deserved “substantial credit for identifying ways to pay for these proposals.” 

One of the mechanisms would be a push to end the tax characterization  of carried interest. The plan mentioned hedge funds as beneficiaries, which is true. Other sectors that use carried interest include, of course, real estate fund managers and developers.

Congress needs to pass a measuring including carried interest elimination. Might it happen? There is a lot of political pressure, to say nothing of popular dislike.

“Carried interest legislation has been on the table pretty much every year going to probably 2007,” Michelle Jewett, a partner in the tax practice at Stroock, tells GlobeSt.com. “This has been on the Democrats’ hit lists for a long time. The question is whether there’s uniform support among Democrats for this or [whether] it’s part of a package so attractive that they’re willing to go along with it even if they don’t have anything against it.”

A few members of Congress introduced a bill to eliminate carried interest in mid-February.

“I think it’s got a very good chance, regardless of what happens to the [proposed hike in the] capital gains rate,” Louis Vlahos, a general partner at law firm Rivkin Radler, tells GlobeSt.com. “It’ll be part of the ‘sausage making’ of negotiating legislation that can pass.”

It could be folded into a bill using the reconciliation process so that the Senate could pass it by a simple majority.

To be sure, much needs to happen before this point. Certainly, an intense lobbying effort can be expected. 

“Rewarding risk by a capital gains rate that is lower than the ordinary tax rate, allowing real property to be traded with some tax deferral, recognizing that risk is not just the risk associated with cash investments and allowing a carried interest in a real estate transaction to qualify for capital gains, together encourages the productive risk-taking that spurs investment in economically struggling communities and more challenging assets, like affordable housing, and in more challenging markets and submarkets in communities,” Real Estate Roundtable CEO Jeff DeBoer said in an emailed statement.   

The current law in these areas may be in need of review and reform,  but repealing these incentives is simply not wise, DeBoer added.

 However, even if it passes, tax attorneys and CPAs would quickly be on the case, depending on the specifics, to find ways of minimizing the impact.

“For every tax law they pass, there are hundreds of smart accountants and tax lawyers trying to find loopholes,” Ken Weissenberg, a tax partner and co-leader of EisnerAmper’s national real estate practice, tells GlobeSt.com.

For example, a plan could refinance holdings, rather than selling them, and distribute the proceeds, which is “not taxable because it’s a financing distribution,” Weissenberg says.

Or there’s the old standby: Charge enough more to ensure the same level of profit after tax as before. 

“It’s within the realm of possibility that these changes are going to work their way into those financial models,” Jessica Millett, partner and chair of the tax department at NYC real estate-focused law firm Duval & Stachenfeld, tells GlobeSt.com. And eventually into what investors pay.