Ashley Hinson fought to save private equity’s favorite loophole

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 Committee Chairman Jason Smith (R-Mo.) said all options were “on the table.”

What happened next was what always happens: According to Politico, private equity and venture-capital trade groups began messaging members of Congress about how many jobs the industry sustains in each congressional district, and about how small-businesses and regular people would be the ones who ultimately paid the price for a change in policy. And Hinson joined a few dozen other Republican members of Congress in asking Smith to keep the carried-interest provision as it is.

“We recognize that the issue of carried interest has been heavily politicized and frequently mislabeled as a loophole,” Hinson and her colleagues wrote in a letter that April. But they insisted that “carried interest is not a loophole but rather a critical, longstanding investment management tool beneficial to our nation’s economy.”

The letter argued that it was a slippery slope to ending all preferential treatment for capital gains, and attempted to undercut the Trump proposal by noting that Joe Biden had previously embraced it. Closing the private-equity tax break would “directly undermine the pro-family and pro-growth benefits” of the tax law and hurt the middle class. While the loophole’s critics point out that the biggest beneficiaries are, in fact, high-powered private-equity managers, these members of Congress argued that the effect of changing the rule would be far-reaching: It would “harm millions of partnerships in real estate, private equity, and venture capital by disincentivizing entrepreneurial risk-taking and investment, potentially jeopardizing jobs in every state and district.”

Ultimately, the effort paid off. Despite Trump’s bluster, Republicans on the House Ways & Means Committee nixed the idea. The notorious tax break looks safe for the foreseeable future.

“The funny thing is, in some sense, I agree with the letter—it’s not a loophole,” says Jonathan Choi, a professor at Washington University School of Law in St. Louis. “It’s not a loophole anymore because Congress has considered it and decided to leave this terrible policy on the books so many times. At this point, it’s intentional malfeasance on the part of Congress.”

Tax professors are not as divided on the issue as members of Congress. Choi once surveyed 157 of his colleagues and found that all but 10 believed carried-interest should be taxed as income. It is “the single policy on which tax professors are most strongly agreed,” he says. And despite arguments from Hinson and others that Congress needed to maintain the tax rate to keep its investment industry competitive with other countries, plenty of other nations already treat such investments less favorably. The United Kingdom, one of the countries Hinson’s letter argued the nation risked losing ground to, got rid of its preferential treatment just this year.

Hinson, whose campaign did not respond to a request for comment, has proven to be a reliable vote for corporate tax breaks and deregulation in Washington. She has backed major cuts to the Securities and Exchange Commission—Wall Street’s top watchdog—and the Consumer Financial Protection Bureau, which protects Americans from scams and dodgy financial instruments. About 95,000 Iowans are employed in the financial services and insurance industry, according to the state economic development authority, and Hinson’s ties run even deeper: According to her 2025 financial disclosures, her husband owned between $1 million and $5 million in stock in High Street Insurers, a subsidiary of the private-equity firm Huron Capital.

But private equity and hedge funds are increasingly a thorny subject in Iowa politics. The Republican nominee for governor, Zach Lahn, has castigated private investment firms on the campaign trail for buying up farmland and homes in the state. Democrats have recently criticized Hinson for taking $30,000 in campaign donations from billionaire CEO Marc Rowan and other employees of Apollo Global Management—the private-equity giant that owns a group of embattled Iowa health-care facilities—and $26,500 from Stephen Schwarzman, the Blackstone Group co-founder who once compared Obama’s efforts to repeal the carried-interest loophole to Hitler’s invasion of Poland. (He later apologized.) All told, Hinson raised more than $1 million from individuals and PACs tied to the securities and investment industry over her three previous campaigns, according to the Center for Responsive Politics. 

And that’s a drop in the bucket compared to Wall Street’s support for her current campaign, where the most recent polls show her locked in a tight race with Turek that could determine control of the Senate next year. In her bid to replace the retiring Sen. Joni Ernst in the upper chamber, Hinson is getting major support from Fight On Iowa, a hybrid super-PAC that’s entered into a joint fundraising agreement with the candidate’s campaign committee; it’s a way for candidates to rake in large donations far in excess of what a contributor can gave to a campaign committee. So far, the PAC has raised $1.77 million. A full $1.5 million of that has come from one donor: Ken Griffin, the New York- and Florida-based hedge fund billionaire who has given generously to conservative causes. The second largest contributor, a California hedge-funder named Bill Duhamel who previously claimed he was “cheated” by George Santos, gave $100,000; the third-largest individual donor is a banker from Connecticut. No donations have come from residents of Iowa or from named individuals outside the financial services industry.

Griffin is not a major beneficiary of the carried-interest loophole himself. Because hedge funds operate on a much quicker time-frame than private equity, their realized gains are generally taxed as ordinary income. (Citadel did lobby Congress on two bills that aimed to close the carried interest loophole in 2017, although the firm says it was for an unrelated issue.) But in a 2013 speech at the Economic Club of Chicago, he stated that “I don’t have a lot of skin in the game on this issue from my personal vantage point but I have an interest in this as a matter of principle.” The effort to target the tax status of private-equity holdings was inconsistent with a tax code that “favors the creation of wealth.” Obama’s effort was “populist, it makes for some really good rhetoric, but it doesn’t make for fairness.” Griffin said of the Obama administration’s proposal.

Griffin, a frequent critic of Democratic regulatory policies who has also voiced concerns about the Trump’s administration’s tariffs and corporate meddling, is one of the largest donors to Republican candidates this cycle, pouring a reported $40 million (so far) into the Midterms—mostly for Senate races. On top of the Fight On Iowa contributions, he’s given $10 million to the Senate Leadership Fund, which is running ads to boost Hinson, among other candidates. In a statement, Griffin said, “Ashley Hinson possesses the experience, commitment, and integrity to deliver results for Iowa’s families and communities,” and “Iowans will be well served by her leadership in the Senate and I am proud to support her.”

Hinson is just one of many candidates he’s supporting. But the money pouring into her race from one donor—and one industry—represents a marked contrast with her self-styled image as a fighter against “special interests.” Not long after she got to Washington, Hinson sent out an appeal for grassroots donors to help her hold onto her seat.

Democrats “believe that with their outside money, and their deep-pocketed donors, they can spend their way to a victory,” she said.