Obama Targets Carried Interest To Pay for Jobs Bill

WASHINGTON, DC-Changing the tax characterization of carried interest is one of the methods President Obama is proposing to use to pay for his $447 billion jobs package unveiled last week. The plan calls for $18 billion in new revenue by taxing carried interest of private equity managers and real estate investors as ordinary income as opposed to capital gains.

The specter of taxing carried interest at ordinary tax rates has been dogging the real estate industry–as well as other affected sectors–for years. So far, intense lobbying has managed to derail such attempts. This time, however, might be different because of the politics involved. While few observers believe Obama will get his entire $447 billion package, Republicans will be loathe to dismiss it entirely and thus be painted as obstructionists. So some of its measures are likely to be passed–along with accompany revenue-raising changes.