While giving remarks at the liberal Tax Policy Center, Senate Finance Ranking Member Ron Wyden (D-Ore.) called for increasing taxes on capital gains by taxing it as ordinary income. Deriding the capital gains tax as a “loophole,” Wyden criticized GOP plans to reduce the rate, instead suggesting that they should be taxed at a top rate of 39.6 percent. As noted in his remarks:
“Of course, when you talk about the carried interest loophole, you’re talking about capital gains. And when you talk about capital gains, you’re talking about the biggest tax shelter of all – the one hiding in plain sight.
“Today the capital gains tax rate is 23.8 percent. Republicans want to make it 16 percent. So if you can take advantage of a gimmick that characterizes your income as a capital gain, your tax rate plummets. The White House and the majority party in Congress are working to make it even easier to get away with that gamesmanship.”
A goal of the left is higher taxes across the board and one of their favorite targets is hiking the capital gains tax. They do this because they know they can only raise the top ordinary income tax rate so much higher than it is today without wrecking the economy.
Often they see raising the cap gains tax in increments as the best way to achieve their long-term policy goal of higher taxes. One of their favorite targets is taxing carried interest capital gains as ordinary income. Despite the misleading rhetoric put out by the left, there is no difference between carried interest and any other income derived as a capital gain.