Private equity firms lobby against new US tax proposals
“Earlier this month, as the Blackstone offering was being prepared, Senate Finance Committee Chairman Max Baucus, D-Mont., and Charles Grassley, R-Iowa, introduced legislation that would require publicly traded partnerships to be treated as corporations for federal tax purposes. Under current law, income distributions from publicly traded partnerships are taxed at the capital-gains rate of 15% -- below the top corporate tax rate of 35%. On Friday, Rep. Sander Levin, D-Mich., introduced a bill in the House that would jack up taxes paid by managers on carried interest to as much as 35% from only 15% now. Carried interest is a portion of the profits from an investment that's paid to the manager. In the private-equity business, it's often used to compensate managers for investing alongside their clients in a buyout. “Private Equity Ends Week On Top In Battle With Congress”, Dow Jones, 22 June 2007.
“... on June 14, Schwarzman was the master of the financial universe, fresh from a blitz of media attention and about to launch the most anticipated initial public offering of the year. An hour later, his victory lap was thrown off course by word of a bill in the U.S. Senate to more than double Blackstone's tax burden -- the first of what are likely to be a slew of proposals and regulations aimed at hedge funds and private-equity firms.... House Democrats fired a new salvo on June 22, when Ways and Means Chairman Charles Rangel of New York and Financial Services Chairman Barney Frank of Massachusetts introduced legislation that would tax all fund managers' share of profits at the 35 percent corporate rate, instead of the 15 percent capital-gains rate they currently pay.” Ryan J. Donmoyer and Elizabeth Hester, “Blackstone Sparks Lobbying `Battle Royale' Over Taxes”, Bloomberg, 25 June 2007.
“The private equity industry is not just sitting back and waiting for Congress to raise their taxes. The Private Equity Council, a less-than-year-old trade group representing many large buyout firms in the United States, has hired big guns from the lobbying world to defend their interests in Washington” “Private Equity Lobby Girds for Tax Fight”, New York Times, 25 June 2007.