Is Trump’s Crusade Against Carried Interest Just Another Negotiating Tactic?

Wednesday, April 30, 2025

• Carrying on about carried interest: Industry groups are scrambling to lobby the Trump administration in order to convince them to keep the carried interest provision in the new tax code.

• Shorenstein scion: Brandon Shorenstein inherited a tough situation when he became the CEO of Shorenstein Properties.

• Zone of contention: Related pushes zoning and tax changes for its $12B Hudson Yards casino, but strong opposition and political hurdles remain.

• Big comeback: Big Lots is reopening 132 stores under new ownership after bankruptcy, aiming to regain market share with deeper discounts and refreshed inventory.

• Virtually prepared: VR is quietly emerging as an effective tool for building emergency training, helping teams prepare for high-stakes situations.

• Multifamily outlook webinar: Join us May 20th to learn how data and tech are helping multifamily leaders adapt to tighter margins and rising renter demands. Sign up

• In case you missed it: Discover how investment teams use AI and data analytics to make smarter, faster commercial real estate decisions in this insightful webinar recording. Watch

Editor’s Pick

Is Trump’s Crusade Against Carried Interest Just Another Negotiating Tactic?

President Trump, despite his career in real estate, has never been a fan of the carried interest tax break. This provision in the tax code allows investment managers—such as those in private equity, venture capital, and real estate—to receive a portion of a fund's profits as compensation. Rather than being taxed as income, this profit is taxed at the long-term capital gains rate, which is lower than the ordinary income tax rate, saving fund managers a significant amount. As Trump prepares his new tax plan, he has already stated his desire to eliminate the provision once and for all, sending the real estate and investment banking industries into a lobbying frenzy.

President Donald Trump has a long history of advocating for the elimination of the carried interest tax break. During his first presidential campaign in 2016, he described it as “unfair” and pledged to abolish it, stating, “We will eliminate the carried interest deduction and other special interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers.”

In 2017, Trump reiterated his commitment, saying, “It's out. Done,” referring to the carried interest loophole in his tax plan. However, the provision was not eliminated in the final tax reform due to resistance from some lawmakers and lobbyists. Trump later acknowledged using the issue as a negotiating tool, stating, “I could have had carried interest out, but you would have paid 23 percent or 24 percent, instead of 21 percent, and I wanted the 21 percent.”

Earlier this year, Trump announced that he was working on updates to his previous tax plan. White House Press Secretary Karoline Leavitt told reporters that Trump was interested in changing the current bill to, among other things, eliminate “special tax breaks for billionaire sports team owners.”

Since then, lobbyists have been working hard to demonstrate the importance of the carried interest loophole. “We have heard from interest groups from around the country, and we want to do right by them,” House Speaker Mike Johnson told reporters on Tuesday. The impact of the additional tax liability would be significant—a recent study showed that the real estate industry could experience a long-term contraction of around 4% if the tax break were to end.

There is some hope that Trump is using the carried interest tax break as leverage in negotiations with potential opponents of the bill. But there is less opposition within his own party than during his first presidency. Since Republicans control the House and Senate (and arguably the Supreme Court), there isn’t much reason for Trump to bluff.

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From Our Partner

The Grandson of the Founder of Shorenstein Property Has Had Mixed Results So Far

Brandon Shorenstein was appointed the head of his grandfather's seventy five year old New York Real Estate stalwart Shorenstein Properties at 34 right before the pandemic struck. Since then the company's property portfolio, which consists mostly of office buildings in major markets, has struggled. After handing over properties to lenders and selling others at a loss, Shorenstein Properties is now 5 million square feet smaller than it was when Brandon became CEO.

Obviously, much of the hardship that the company has felt is not Shorenstein's fault. The buildings that have been acquired since he took the helm have mostly gained in value. If Shorenstein is able to continue to grow the company that his grandfather started and his father grew, he will show that he is much more than just the beneficiary of nepotism.

Fast Take

Related Pushes Hudson Yards Casino Amid Fierce Local Opposition

At a pivotal City Council hearing, The Related Companies urged lawmakers to approve zoning changes and a payment-in-lieu-of-taxes (PILOT) scheme critical to their $12 billion casino project at Hudson Yards. The proposal includes a five-story casino, a 1,200-foot hotel tower, three residential towers with up to 4,000 units, and six acres of public space. CEO Jeff Blau warned that without approval, the 13-acre Western Rail Yards would remain undeveloped, and the company would be shut out of competing for one of New York State’s limited downstate casino licenses. Related argued that the 2009 rezoning plan no longer makes financial sense and that their updated proposal, including 2,500 new apartments, responds to community needs but requires the PILOT plan to fill a $3 billion funding gap.

Opposition remains strong, particularly from Friends of the High Line, who argue the taller towers would overshadow the park and damage its unique character. The nonprofit’s executive director criticized the project as a betrayal of past agreements, while Blau accused them of NIMBYism and resisting any new development. Local Councilmember Erik Bottcher, whose stance may determine the project’s fate, expressed skepticism over discarding the hard-won 2009 plan but acknowledged Related’s explanation of changing market conditions. As union leaders touted job creation and critics decried casinos and broken promises, the hearing underscored the high stakes and deep divisions surrounding one of New York’s most valuable development sites.

Fast Take

Big Lots Reopening 132 Stores After Bankruptcy Under New Ownership

Big Lots is preparing to reopen 132 stores across 14 southern and midwestern states after shutting down all its locations last year during bankruptcy proceedings. The discount retailer was acquired by Variety Wholesalers, which also owns Roses Discount Stores and Maxway, after Big Lots filed for bankruptcy in September 2024 and closed roughly 1,000 stores. The reopening will take place in two phases beginning May 1 and May 15, with locations in states such as Alabama, Florida, Georgia, and North Carolina. Variety Wholesalers' CEO Lisa Seigies said customer response to the newly stocked stores has been very positive so far, with nine locations already reopened this month.

High inflation, rising interest rates, and stronger competition from other discount chains were major factors behind Big Lots’ financial troubles. Experts noted that Big Lots had struggled to deliver compelling bargains compared to rivals. Now, the retailer aims to regain momentum with a refreshed inventory and deeper discounts under its new ownership. But, analysts warn that succeeding in the highly competitive discount market will require significant improvement beyond simply reopening shuttered stores.

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