We couldn’t have known it at the time, but in September 2015, three months after launching his presidential campaign, Donald Trump published a tweet that turned out to be rather important.
“The hedge fund guys (gals) have to pay higher taxes ASAP,” the Republican wrote at the time. “They are paying practically nothing. We must reduce taxes for the middle class!”
Trump was referring, of course, to the carried-interest loophole, which he intended to close if elected. “The hedge fund guys are getting away with murder,” he said on CBS’s “Face the Nation” two months into his campaign. “They’re making a tremendous amount of money. They have to pay taxes. I want to lower the rates for the middle class. The middle class is the one, they’re getting absolutely destroyed. This country doesn’t have – won’t have a middle class very soon.”
Even after the election, Trump World paid lip service to the idea. Then-White House Chief of Staff Reince Priebus said in April that the president “wants to get rid of carried interest.” As recently as late September – not quite three months ago – Gary Cohn, the top economic voice in Trump’s White House, said the president “remains committed to ending the carried interest deduction.”And yet, here we are, watching the Republican Congress pass a tax plan that would raise taxes on much of the American middle class, while protecting “the hedge fund guys” who are, in Trump’s words, “getting away with murder.” Reuters reported yesterday:
[The Republican tax plan] leaves in place [the] “carried interest” loophole for private equity fund managers and some hedge fund managers, despite pledges by Republicans including President Donald Trump to close it.
It’s worth emphasizing that the GOP plan tweaks the policy: “the hedge fund guys” currently have to hold assets for a year to enjoy the lower tax rate, and under the new the plan, that will be three years. The loophole itself, however, will remain part of the U.S. tax system.
And there’s reason to believe some Republicans are a little embarrassed by this.
NBC’s Willie Geist asked House Ways & Means Committee Chairman Kevin Brady (R-Texas) about this policy yesterday, and the Texas Republican – one of the principal architects of the GOP tax plan – grew unexpectedly angry and refused to answer questions on the subject.
I suppose that’s understandable. If I were in his shoes, I’d have trouble defending the substantive details of this legislation, too.
But Brady’s quarrelsome posture doesn’t change the underlying truth: Trump promised to close this loophole and focus on the middle class. The president and his party instead kept the loophole and, if their plan is fully implemented, will stick much of the middle class with a higher tax bill.
As for Trump’s 2015 tweet, he wanted the “the hedge fund guys” to “pay higher taxes” as soon as possible. Apparently, as far as the GOP is concerned, it’s not possible now.