White House advisor Valerie Jarrett was tasked by President Obama with trying to kill a controversial income tax perk used by the "wealthy and well-connected." Yet she made a killing on a Chicago real estate deal by enlisting the same benefit. That's what the Better Government Association found in a months-long investigation by the nonpartisan nonprofit's D.C.-based reporters, Chuck Neubauer and Sandy Bergo, with wing support from Patrick Rehkamp in the BGA's Chicago office. The precise amount of the break Jarrett received under the controversial "carried interest tax loophole" is not known, but the BGA estimated it could have saved her $200,000 or more.
The loophole was applied to Jarrett's earnings from a 2013 Chicago real estate deal involving a $160 million luxury apartment high-rise -- earnings that topped $1 million and came while she was working for the White House as a senior advisor to the president, the BGA found. Before joining the White House, Jarrett was a real estate developer in Chicago.
The term "carried interest" refers to money paid to wealthy investment managers that is taxed at the capital gains rate of 20 percent, about half the 39.6 percent maximum rate applied to salaried income. Since his first presidential campaign, Obama has proposed taxing carried interest income at the higher rates, and he tapped Jarrett to help achieve that goal. Obama pushed to eliminate the loophole as a key mechanism to finance the 2011 jobs-creation bill he submitted to Congress called the American Jobs Act.
In a September 2011 address to Congress, he said: "Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs?"
Obama also made carried interest an issue in the 2012 campaign against Mitt Romney. The former private equity mogul had saved an estimated $2.5 million in taxes in 2010 and 2011 by using the loophole. An Obama television spot included this line: "Tax havens, offshore accounts and carried interest, Mitt Romney has used every trick in the book."
Jarrett did not comment for this story, but the White House did. Click here for details.