On her campaign website, Rep. Ashley Hinson, the Republican nominee in Iowa’s toss-up US Senate race, says she’s “laser focused on lowering taxes on working families.” In Washington, she’s tackled a different project: Saving private equity’s favorite tax break.

The carried interest loophole, which allows private investment managers to save billions of dollars each year by paying a markedly lower tax on much of their income than many less-affluent Americans, is one of the few things that Barack Obama, Joe Biden, and Donald Trump all agree on. Each of the last three presidents has tried to get rid of it. Obama said that it gave tax breaks to people who “don’t need them and didn’t ask for them.” Trump once said private equity executives were “getting away with murder.” It is also the poster-child for special-interest survival. Wall Street firms have spent tens of millions of dollars on lobbyists to keep it intact, while lawmakers who worked behind-the-scenes to save it have landed lucrative jobs in private equity, and raked in campaign contributions.

The way the loophole works is fairly simple. Private equity managers traditionally operate under a principle known as 2-and-20, in which they take a 2-percent fee on the funds they manage, and then a 20-percent cut—the “carry”—when the assets are eventually sold. The former is treated as regular income, but the latter is taxed as long-term capital gains. Oscar Valdés Viera, a senior policy analyst at Americans for Financial Reform, which has advocated for closing the loophole, likens the carry to a performance incentive: “If a lawyer gets a bonus, if you get a bonus at your job, you pay in the tax bracket that is appropriate for your level of income—you don’t get a preferential treatment of that; we think it should be the same for fund managers.”

Hinson, a former local TV news anchor who was first elected in 2020 to a northeast Iowa swing district, missed the showdown over carried interest when Republicans overhauled the tax code in 2017. That year, thanks to a furious lobbying effort and the work of lawmakers like Sen. Pat Toomey of Pennsylvania, the industry fended off a repeal effort with only a minor tweak—lengthening the period an investment firm had to hold onto an asset before it could apply the discounted rate, from one year to three. But in 2025, Trump signaled his intent again to fully close the loophole, which the Congressional Budget Office has projected could bring in about $13 billion in tax revenue over the course of a decade. House Ways and Means........

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