PEC issues statement on proposal to raise taxes on growth investments
WASHINGTON, DC, DECEMBER 7, 2009 – The Private Equity Council issued the following statement on provisions of H.R. 4213 (the so-called “extenders” bill), filed today by the House Ways and Means Committee, that would change the tax treatment of carried interest from long-term capital gain to ordinary income. The statement should be attributed to Douglas Lowenstein, President of the Private Equity Council.
“Raising taxes on growth investments by private equity, real estate and many other partnerships just doesn’t make sense — particularly in this time of fragile economic recovery and continuing joblessness. By more than doubling the tax rate, the carried interest proposal will discourage investment; deprive many American businesses of the capital they need to survive and grow; and jeopardize critical job creation opportunities.
“The bill also would impose a significant new tax burden on investment partnerships that wish to offer shares to the public — a provision that would discriminate among and between firms and further reduce important investments.
“Carried interest is appropriately taxed as a long-term capital gain because it represents the profit that an investment partnership earns by buying a capital asset — in the case of private equity, a company — increasing its value over time and eventually selling it for more than the purchase price.
“Congress established a lower capital gains tax rate to encourage long-term investments that grow the economy. In the case of private equity, that’s just what has happened. In the past six years, private equity partnerships in the United States invested more than $240 billion in equity in American businesses. Congress should not put future investments at risk by raising taxes now.”
About the Private Equity Council
The Private Equity Council, based in Washington, DC, is an advocacy, communications and research organization and resource center established to develop, analyze and distribute information about the private equity industry and its contributions to the national and global economy. PEC members are: Apax Partners; Apollo Global Management LLC; Bain Capital Partners; The Blackstone Group; The Carlyle Group; Hellman and Friedman LLC; Kohlberg Kravis Roberts & Co.; Madison Dearborn Partners; Permira; Providence Equity Partners; Silver Lake; and TPG Capital (formerly Texas Pacific Group).
# # #
