Former Obama Treasury Secretary’s $14 Million Private Equity Pay
Jacob Lew's big payday arrived after he refused to crack down on the carried-interest loophole.
Jacob Lew, who served as Treasury Secretary during President Obama’s second term, ignored calls to crack down on tax strategies used by sophisticated investment managers to pay an extraordinarily low tax rate on earnings.
Instead, Lew joined the private equity industry after leaving the administration. He became a partner at the firm Lindsay Goldberg in 2017.
The move turned out to be incredibly lucrative. According to new disclosures, Lew earned at least $14.4 million over the last year from the firm.
The window into Lew’s income was required as part of a vetting process after President Biden nominated Lew to serve as U.S. ambassador to Israel earlier this year.
The payday highlights the significant annual rewards for Lew, who refused to take action on tax rules that vastly benefit investment partners of hedge funds and private equity firms.
Obama campaigned aggressively to reform the tax code on the so-called “carried interest loophole,” which allows investment managers to pay a preferential capital gains rate, which tops out at 23.8 percent on investments held more than a year. The tax rules allow even billionaire investment managers to pay rates that are below what many ordinary Americans pay.
During the 2012 presidential race, the Obama campaign pointed to Mitt Romney’s use of the carried interest rule as a private equity executive to claim that he “used every trick in the book.”
While lawmakers voiced support for closing the loophole, Congress ultimately refused to move on tax reform proposals aimed at removing the rule.