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U.S. Private-Equity Tax Change Doubtful This Year, Says Carlyle Co-Founder
Suggested Reform Could Increase Taxes on Private-Equity Profits
By MIKE SPECTOR Feb. 26, 2014 5:06 a.m. ET
BERLIN— Carlyle Group LP co-founder David Rubenstein said U.S. lawmakers are "unlikely" to take up legislation this year that could potentially increase taxes on deal profits reaped by private-equity managers.
Mr. Rubenstein's comments came after the chairman of the U.S. House Ways and Means Committee, Republican Dave Camp of Michigan, said Congress should "clean up" the treatment of private-equity firms' share of deal profits, called “carried interest." These profits are currently treated as capital gains and taxed at a lower rate than ordinary income.
"We can clean up provisions like carried interest that allow certain private-equity firms to get the investment-income tax rate on what anyone else would call normal wage income,” Mr. Camp said in an opinion piece published on Wednesday in The Wall Street Journal outlining a series of tax-reform proposals.
" Mareceorm Superkiaturn Canferenc’ ~~ But Mr. Rubenstein, often viewed by private-equity watchers
TPG ‘Contemplating’ Going Public as an authority on national politics since his firm is based in
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Montana Democrat Max Baucus, previously the chairman of the Senate Finance Committee, was just confirmed as the U.S. ambassador to China, lowering the chances that chamber will take up such legislation, Mr. Rubenstein said. In addition, a term limit will force Mr. Camp to relinquish his committee chairmanship in the House next year, he said.
"It's unlikely that will get into law," Mr. Rubenstein said of Mr. Camp's proposal before an audience at the SuperReturn International private-equity conference in Germany's capital. "I don't think there is likely to be any tax reform legislation passed by this Congress at all.”
Private-equity firm managers, including Mr. Rubenstein and founders of other large buyout firms, have argued that carried interest they receive after investing in a company and later selling it should be treated as a capital gain. Proponents of taxing these profits at a higher rate contend the money is compensation
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