Legislation addressing the so-called “carried interest loophole” is gaining momentum in Illinois after the release of data finding the measure would generate $473 million for the cash-starved state.
Grassroots Collaborative, a coalition of labor unions and human service organizations, April 19 touted passage of a new privilege tax on private equity firms, hedge funds and other financial organizations with the release of “ Illinois Billionaires and Their Lucrative Loophole.” The report, released in conjunction with Hedge Clippers, a similar coalition, blasts a small group of wealthy investment managers for failing to pay their fair share of state taxes. The report calls on the Illinois General Assembly to close the loophole and fund state programs hampered by a budget crisis that has dragged on for almost two years.
“Illinois’s private equity and hedge funds are conservatively estimated to be earning $4.8 billion per year in under-taxed carried interest,” the report concludes. “A state bill to recapture this revenue at the ordinary income level has strong sponsorship in both houses of the state legislature, and it would raise at least $473 million each year for schools, health care and essential public services in Illinois.”