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Biden’s Plan Would Eliminate Private Equity’s Coveted Tax Break

April 28, 2021, 9:00 AM

Private equity’s most lucrative tax break is in peril once more.

Included in President Joe Biden’s plan to fund an ambitious expansion in social spending, released Wednesday, is a call on Congress to abolish the preferential treatment given to a key method of compensation for private equity managers.

In addition to salaries, those managers rely especially on a share of the appreciation in the assets they oversee -- known as carried interest. Those profits -- sometimes in the millions of dollars -- have been taxed as capital gains, at a rate much lower than the top marginal income tax ...