WASHINGTON, DC – Today, American Investment Council President and CEO Drew Maloney released the following statement regarding H.R. 1068, which was recently released by Representatives Bill Pascrell (D-NJ), Andy Levin (D-MI), and Katie Porter (D-CA):

“The 2017 tax law made sure that investors only realize long-term capital gains carried interest after investing in a company for over three years.  As workers and local economies continue to struggle during this pandemic, this would be the worst time for Washington to reverse this responsible policy and punish long term investment that creates jobs and builds businesses in communities across America.”

Background on the Private Equity Industry and Carried Interest:
 
Private equity is an important driver of economic growth in the US with firms investing hundreds of billions of dollars into the U.S. economy each year. However, there are a lot of misconceptions about the industry. To learn more, please check out this short whiteboard video about a commonly misunderstood aspect of private equity: carried interest.

Private equity firms work to improve operations, governance, and competitiveness of businesses by hiring managerial talent, advancing technology, and expanding distribution channels. Typically, after four – seven years, private equity sells the company or lists it for initial public offering (IPO).

The private equity industry supports millions of jobs and strengthens retirements across America.  For example:

  • New Jersey: The private equity industry directly employs 239,000 workers in New Jersey. The New Jersey Division of Investments has enjoyed a 12.6% return from private equity over a ten-year period.
  • California: The private equity industry directly employs over 1.1 million workers in California. The California Public Employees Retirement System has enjoyed a 10.4% return from private equity over a ten-year period.
  • Michigan: The private equity industry directly employs over 242,000 workers in Michigan.  The Michigan State Employees Retirement System has enjoyed a 14.3% return from private equity over a ten-year period.
The bill’s negative impact on long-term investment is also not limited to private equity or venture capital. In 2019, 14 national organizations representing a broad spectrum of America’s real estate urged Congress to reject similar legislation which, “would result in a huge tax increase on countless Americans who use partnerships in businesses of all types and sizes.”

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