Carried Interest Tax Impact Could Be $20B

WASHINGTON, DC-Real estate associations are becoming increasingly alarmed as proposals to tax carried interest at higher rates are moving closer to fruition. Last month the House Ways and Means Committee introduced a comprehensive tax plan that would, among other measures, more than double, to 35%, the tax rate on carried interest. Various studies have put forth estimates of the cost of this tax–one number is $2.5 billion, for instance–that commercial real estate industry watchers say grossly underestimate the true effect.

A study commission by the Real Estate Roundtable, released today, for instance, finds that the cost of this proposal, if implemented into law, could reach $20 billion or more. Such a law, Douglas Holtz-Eakin, former Director of the Congressional Budget Office and author of the study, told reporters during a conference call, will certainly not be the minor event as it has been characterized.