Washington is pushing a new tax on carried interest capital gains that will discourage investment across America. Instead of raising taxes on American investors and innovators, Washington should move forward with historic tax reform that fuels economic growth across our country – supporting millions of jobs, helping small businesses grow, and providing strong benefits to workers and their families.
Get the FactsWhat is Carried Interest?
Carried Interest Tax Increase Targets Minority Owned Funds
Shila Nieves Burney, Founder and Managing Partner of Zane Venture Fund and Zane Access, explains how private investment has driven growth and opportunity.
Private Equity Supports Small Business
AIC President & CEO Drew Maloney discussed the impact of private equity investment on small businesses and communities across America.
Sunshine Beverages
Private equity has helped this Winston-Salem, North Carolina-based company grow its distribution network, establish key grocery chain partnerships, and continue to deliver on its promise of great taste, no artificial flavors, and lower sugar.
Anthos Therapeutics
Anthos Therapeutics is a Massachusetts-based biopharmaceutical company conducting late-stage clinical trials on an exciting new drug that has the potential to prevent blood clots, which lead to strokes, heart attacks, and are responsible for 1 in 4 deaths in the United States.
The Pad
This boutique hotel and hostel sought out a private equity investment to develop a 36-room lodge that accommodates every traveler’s budget, featuring a bar, rooftop, and business center.
RVshare
When RVshare partnered with private equity, the company capitalized on the investment by bolstering staff and scaling its business through strategic marketing campaigns.
Private Equity Supports Businesses Across Nevada
Rep. Horsford (D-NV) discussed how all businesses, ranging from small businesses to major Las Vegas hotels, have benefitted from private equity.
Inland Coatings
Inland Coatings is an industrial coating manufacturer in Adel, Iowa, and an example of a successful partnership between private equity and a rural Iowa company.
Black Rock Coffee
Black Rock Coffee had a committed private equity partner who provided critical capital and expertise to help the business weather the pandemic.
After President Trump’s historic tax reform, the private equity industry invested over $5.6 trillion in the American economy – backing over 39,000 small businesses.
President Trump’s historic law struck the right balance on carried interest capital gains treatment and encouraged long-term local investment, innovation, and economic growth. We encourage the Trump Administration and Congress to keep this sound tax policy in place and unleash more long-term capital investment that supports jobs, workers, small businesses, and local communities.
Over the next five years, the private equity industry will invest over $3 trillion across America. A new tax on small business investors and entrepreneurs would hurt jobs and discourage the investment and innovation we need for the American economy to grow.
Congress does not need to do anything to protect the long-term investments carried interest incentivizes. In 2017, the TCJA extended the hold time for assets from one to three years for an investor carried interest to be taxed at the long-term capital gains rate –which helped strengthen long-term investment in America.
Carried interest capital gains occurs in virtually any partnership that raises money (profits interest). It is simply an agreement between partners on sharing eventual profits (capital gain) from the sale of a business (capital assets) and is currently taxed appropriately at capital gain rates.
The Congressional Budget Office estimated that a 2024 proposal targeting carried interest would only raise $13 billion over ten years – less than one day of federal spending.
A study from University of Southern California Professor Charles Swenson found that raising taxes on carried interest would lead to the:
Get the Facts
Private equity invests in every state and Congressional district across America – directly backing over 12 million jobs, which on average, provide $80,000 in wages and benefits, equating to roughly $41 per hour for a fulltime worker and nearly $10,000 thousand more than the average U.S. worker. Throughout the U.S. supply chain, private equity-backed companies created a net of four new jobs per 100 full-time employees this year.
Small businesses turn to private equity for strategic investments and operational assistance. In 2022, approximately 85% of private equity-backed companies were small businesses that directly employed a total of 1.4 million workers across America. Private equity-backed small businesses, suppliers, and related consumer spending also supported 4.4 million workers, earning $360 billion in wages and benefits and produced $615 billion of GDP growth in 2022.
Private equity fund investments are helping drive the shift towards domestic energy production—from building new plants and expanding oil and gas operations, to maintaining pipelines and extracting critical minerals. Since 2020, private equity firms have invested over $230 billion in the US energy sector.
Private equity is providing capital and industry expertise to thousands of companies at the leading edge of innovation and addressing many of our most pressing societal challenges. Our investments are funding life-saving medical devices, strengthening cybersecurity, and powering artificial intelligence. Since 2020, private equity firms have invested over $1 trillion into information technology.
For the past decade, private equity fund investments, incentivized by carried interest, have channeled more than $1.4 trillion in more than 11,000 manufacturing businesses in every state of the country. Each year, nearly 1,000 manufacturers take on new private equity investments, and it is common to see at least $100 billion invested into these companies in any given year.
Private equity firms and their investments generate significant tax revenues, which strongly support federal, state, and local governments. In 2022, private equity paid $304 billion in federal, state, and local taxes, with approximately $208 billion or two thirds going to federal taxes and the remaining $95 billion going to state and local governments.
