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Investing.com-- U.S. lawmakers are weighing a multibillion-dollar tax break for private credit funds as part of President Donald Trump’s flagship spending bill, the Financial Times reported on Tuesday, citing people familiar with the matter.
The proposal would reduce taxes on dividends paid to investors in business development companies (BDCs), key investment vehicles in the private credit industry. Though passed by the House of Representatives last month, the measure was excluded from the Senate draft but could be added back amid ongoing negotiations, the FT reported.
The Joint Committee on Taxation estimates the tax break would cost $10.7 billion through 2034. Its critics say it would benefit wealthy investors while the broader bill slashes over $1 trillion in Medicaid and food assistance spending, according to the report.
The tax break, labeled “REIT parity” by supporters, would align BDCs with real estate investment trusts, which secured similar treatment under Trump’s 2017 tax overhaul, the FT reported.
Industry giants like Blackstone (NYSE:BX), Apollo Global, and Ares Management (NYSE:ARES) have increasingly used BDCs to attract capital from affluent retail investors.
The Congressional Budget Office projects the overall bill would add $2.4 trillion to U.S. debt by 2034, with limited impact on economic growth, the report added.