Biden: Our Attempts to Tax Carried Interest Like Income Akin to 'Liberating Death Camps'

April 19, 2016

Vice President Joe Biden, in response to another Nazi reference, said in an interview airing Tuesday that the Obama administration's attempts to tax carried interest like income was akin to "liberating death camps."

Carried interest, as defined by CNBC, refers to "a rule in the tax code that lets the managers of some types of private investment funds—hedge, private equity, venture capital, real estate and other types of vehicles—pay a lower rate than most individuals."

During an extended interview with CNBC's John Harwood, Biden said there was "no justification" for a hedge fund to pay 15 to 17 percent rates on carried interest.

President Obama has sought to tax income earned by fund managers as ordinary income rather than investment income, which is taxed under capital gains rates.

"You guys have tried consistently through the administration to tax what they call carried interest as ordinary income," Harwood said. "When you started doing that, a big Wall Street guy, Steve Schwarzman, said the Obama administration's like Hitler invading Poland. How do you react to criticism like that? And I would note, you guys haven't been able to get it done."

"I'd say it's like us liberating death camps," Biden said. "The truth of the matter is, there's no justification for a hedge fund paying at 15 to 17 percent. There's just no justification."

"Why haven't you been able to get it done?" Harwood asked.

"Two reasons. I kid the president, 'Mr. President, everything's landed on your desk but locusts,'" Biden said. "We haven't had the clear space to do nothing but talk about how unfair the tax system is as it relates to the tax expenditures, loopholes we want to eliminate. And consequently what happens is a lot of people can go home, if you're a Republican, and say, 'These Democrats are just going after business.'

"Well, if I sit here and explain to everyone — I don't have to, your camera crew and everybody's really bright — and I say, "Well, let me tell you what carried interest is, this means that you're paying at 30 percent, they're paying at 17 percent, and some of them made $1 billion. Twenty-eight made $1 billion." Think that's fair?

"They'll say, 'Well, maybe, if they do something super special with that $1 billion that makes it why they should be rewarded.' They're playing with other people's money. If you take a risk to start a business and you make money, you pay less taxes — because you took a risk. Well, that's because you used your own money."

Published under: CNBC , Joe Biden