Trump is working to eliminate a controversial loophole that has long allowed Wall Street’s überwealthy to evade millions of dollars in taxes every year

President Donald Trump is launching a renewed push to close a controversial tax loophole that has long allowed some of Wall Street’s wealthiest investors to avoid paying millions in taxes each year.

The focus is on a provision known as “carried interest,” which benefits private equity managers, hedge fund investors, and other financial professionals. The loophole allows them to classify their income as capital gains instead of ordinary income, subjecting it to a significantly lower tax rate—sometimes cutting their tax bill in half.

Since the 2008 financial crisis, politicians like Barack Obama have criticized this loophole, arguing it unfairly favors the rich. Trump himself took aim at it during his first presidential campaign, famously saying that billionaire investors were “getting away with murder” because of it.

This latest effort to shut down the practice is part of a broader tax relief package the Trump administration is trying to push through Congress. The timing is critical, as the country’s finances face increasing strain.

Included in the package is an extension of Trump’s 2017 tax cuts, which are set to expire at the end of this year unless new legislation is passed.

“This will be the largest tax cut in history for middle-class working Americans,” said White House Press Secretary Karoline Leavitt. “The president is committed to working with Congress to get this done.”

"Wall Street investors should not be paying less in taxes than firefighters and teachers"
If passed, closing the carried interest loophole could generate an estimated $100 billion in annual savings for taxpayers. The proposal is part of a broader plan that also aims to eliminate tax breaks for billionaire sports team owners.

“Right now, the wealthiest Americans are gaming our tax system to avoid paying their fair share,” said Senator Tammy Baldwin of Wisconsin. “Wall Street investors should not be paying less in taxes than Wisconsin firefighters, teachers, and small business owners.”

On Thursday, Baldwin, along with 12 other Democratic senators, introduced the Carried Interest Fairness Act, a proposal designed to put an end to the loophole.