Real Estate Partnerships Would Benefit in Camp's Carried Interest Plan

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A recently drawn distinction in Congress on carried interest could have long-lasting implications.
Current law treatment would continue for carried interest earned through real estate partnerships under draft legislation issued by House Ways and Means Committee Chairman Dave Camp (R-Mich.). But the plan proposed ordinary income tax rates on most carried interest earned in other partnerships, particularly private equity.
Though it reduces revenue, that difference provides a politically easier pathway to change. It would spare real estate partners from higher taxes and satisfy their advocates who have fought for years to avoid association with money managers who they say should pay ordinary income tax rates for handling income from others' investments, while paying capital gains taxes only on their own contributions.