Since a certain Vermont senator announced his 2016 bid for the presidency, the myth that rich people don’t pay their “fair share” of taxes has been revived from left to right. Actually, the top 1% — frequently heckled by that same Vermont senator — pay nearly half of all federal income taxes. Nevertheless, political class warfare continues.
Most recently, the Trump administration announced its support for a long-time priority of the Democrats: raising taxes on “carried interest." The latter is a share of profits collected by investment managers as a “performance fee” on alternative investments such as private equity. Currently, carried interest is taxed at 20% like any other long term gains tax. The Trump administration has proposed taxing it as regular income, which would increase the rate to 37%.
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