Former Florida governor Jeb Bush has announced the outline of his tax proposal in a new Wall Street Journal op-ed published Tuesday evening. Among Bush’s proposals are three income-tax brackets (28 percent, 25 percent, and 10 percent), cutting the corporate tax rate to 20 percent, and eliminating several “convoluted, lobbyist-created loopholes” in the code.
One such loophole is the advantage for private-equity and other high-dollar financial managers known as the “carried interest” loophole. It’s common practice for hedge-fund managers to receive a percentage of an investment’s dividends as payment for managing those funds. Under the current tax regime, those dividends are taxed not at income rates but at the lower capital-gains rates. The lower rates on capital gains are meant to encourage investment, not give a tax break to those managing those investments.
