Retired LA Lakers basketball player Earvin “Magic” Johnson is the latest public figure to join the carried interest debate consuming Capital Hill.
Johnson, who has an eponymous private equity real estate firm, has endorsed the Access to Capital Coalition, a group of minorities and women in private equity that opposes proposed changes to the tax treatment of carried interest.
“The present carried interest policy has been essential to attracting top talented minorities and women to the industry as independent firms and fund managers,” said the group’s founding member, Willie Woods, in a statement. Woods is a managing partner with New York-based ICV Capital Partners and chairman of the National Association of Investment Companies, an association of minority-owned private equity and venture capital firms.
The group was formed today specifically to fight a bill introduced by House Representative Sander Levin. The bill proposes that carried interest be treated as ordinary income and taxed at a rate as high as 35 percent, as opposed to its current 15 percent capital gains rate. The group said in a statement most minority and women’s businesses are small and mid-level firms, which will be the hardest hit by the bill.
The House Ways and Means Committee is scheduled to discuss the concept tomorrow, along with concepts pertaining to a Senate bill that would increase taxes on publicly traded partnerships like The Blackstone Group. The committee will hear testimony from more than 20 witnesses, many of whom – such as Carlyle Group managing director Bruce Rosenblum and Congressional Budget Office director Peter Orszag – have already discussed the same issues before the Senate Finance Committee.
Increased Congressional interest in private equity taxation has triggered a flurry of recent statements for and against the bills by labor unions, politicians, major newspapers and various business leaders.
Today, the National Conference on Public Employee Retirement Systems, a coalition of US pension funds, withdrew its previously stated opposition to the bills, Reuters reported. Its members reportedly did not agree that public employees could suffer as a result of higher taxes on private equity and hedge funds.