Private Equity and Publicly-Traded Partnerships – S 1624
In A Nutshell – The Case Against S. 1624
S. 1624 is discriminatory. It would prevent private equity firms from becoming publicly traded partnerships (PTPs) while allowing more than 100 other PTPs, mostly in the oil and gas industry, to continue. Indeed, earlier this summer, the Senate Finance Committee expanded PTP eligibility to ethanol and CO2 pipelines.
S. 1624 bill will not raise revenue. It is true that if private equity firms go public they would pay more taxes than they do now. The Blackstone Group has calculated that its tax bill would be $80 million a year more as a PTP than as a private partnership. But by discouraging PTPs, this additional tax revenue will be foregone, as will billions in capital gains taxes that would have been be paid by PTP partners selling their shares.
S. 1624 would deny PE firms the same access to public markets as other U.S. business. The massive tax penalty imposed by S. 1624 makes going public prohibitively costly, thus effectively denying PE firms the permanent source of capital every other American company and industry can obtain to grow and maintain global market leadership.
S. 1624 puts U.S. firms at a competitive disadvantage. Foreign PE firms have access to public markets. By denying similar access to U.S. firms, the bill provides foreign private equity firms, a major competitive advantage over U.S. firms in raising capital. U.S. private equity firms will also be less capable of competing with sovereign wealth funds created by countries like China, Dubai, Singapore, and others.
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