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Illustration: Annelise Capossela/Axios

The carried interest loophole is beginning to look immortal.

Driving the news: President Biden today will unveil a $2 trillion infrastructure plan that the White House hopes to pay for via changes to the corporate tax code. But it will not include any changes to individual income taxes, including on capital gains.

Why it matters: Presidents don't normally get two swings at major tax reform, which is why Trump and Congressional Republicans did both corporate and individual taxes in the same 2017 bill.

  • Biden may prove the exception by addressing income taxes in a subsequent "social infrastructure" plan but, for now, it looks like his focus is on raising the corporate rate from 21% to 28%.
  • Plus implementing a global minimum tax of around 21% (calculated on a country-by-country basis), cutting a tax exemption on the first 10% of overseas profits and ending tax subsidies for fossil fuel producers.

Biden pledged during the campaign to change capital gains taxation, and reports last week were that he would propose that individuals pay ordinary rates on all annual investment income of over $1 million.

  • This would have been a backdoor way to increase taxes on carried interest, at least for many VC, private equity and hedge fund managers.
  • Presidents Obama and Trump had pledged to directly change the tax treatment of carried interest, but neither succeeded.

When asked about the capital gains omission last night during a press backgrounder, a senior administration official said: "Capital gains is not addressed here. The reason for that is that the focus of this plan is on corporate tax reform and reforming the corporate tax system. And we think that that is important as a matter of fairness and also important as a matter of encouraging domestic investment."

Caveat: The White House still seems to be working through its legislative strategy on all this. If taxes and infrastructure spending get separated, then Biden's tax proposal could change.

The bottom line: Private fund managers are unlikely to cheer any proposal that includes a major corporate tax rate increase. But they're certainly breathing some sighs of relief.

🎧 Listen up: White House economic adviser Jared Bernstein joins me on Axios Re:Cap after Biden's speech (we'll publish a bit later than usual). Subscribe here.

Go deeper

Mar 30, 2021 - Politics & Policy

Biden's true tax priorities

(Photo: Stefani Reynolds/CNP/Bloomberg via Getty Images)

President Biden is preparing to go to the mat for four tax increases worth about $1.8 trillion to help pay for his infrastructure and social safety net plans, advisers tell Axios.

Driving the news: Biden will outline an array of tax proposals beginning on Wednesday — an opening bid ahead of months-long negotiations mostly within the Democratic Party — but these are his priorities.

Updated Mar 31, 2021 - Politics & Policy

Biden unveils sweeping American Jobs Plan

Photo illustration: Aïda Amer/Axios. Photo: Mandel Ngan/AFP via Getty Images

President Biden will ask Congress Wednesday to spend $2 trillion on an infrastructure plan over eight years, and pay for it by increasing taxes on corporations for nearly twice as long.

Driving the news: The package, which he will unveil during a speech in Pittsburgh, seeks to fulfill a range of promises he made on the campaign trail to fix the country’s crumbling infrastructure, slow the growing climate crisis and reduce economic inequality.

Top Republicans form new group to fight Biden tax hikes

Marc Short at the White House in March 2020. (Photo: Stefani Reynolds/Bloomberg via Getty Images)

Top GOP operatives have formed a group to fight President Biden's plans to raise taxes to pay for his expected $3 trillion-plus infrastructure package.

Why it matters: The Coalition to Protect American Workers is the first major conservative group formed exclusively to block Biden's tax agenda. Its leaders include Marc Short, who was former Vice President Pence's chief of staff.