Election season is well under way in the US, and on the Republican side of the aisle all eyes are on braggadocious businessman Donald Trump. As in the real polls, he also led in an audience poll at the recent PEI CFOs and COOs Forum, with 39 percent of the audience predicting that he would win the Republican nomination.
Though Trump may be the most likely Republican candidate, his proposed policies on carried interest tax make him far from a favourite among the private equity and hedge fund community. He’s famously said GPs are “getting away with murder” under the current tax code.
“They’re paying nothing and it’s ridiculous,” he said in one CBS interview last August.
Given his plan to up taxes on GPs’ biggest profit source from the capital gains rate of 20 percent to the ordinary income rate of 39.6 percent, it came as a quite a surprise to see one private equity mogul voice his support for Trump in a CNBC interview.
“I’ve known Donald Trump for almost 30 years. He’s one of the kindest and most humble friends I’ve had,” said Tom Barrack, the founder and executive chairman of private equity and real estate firm Colony Capital.
“Kind” and “humble” might be the most surprising parts of that statement for many, but First Round is left wondering, would Barrack really prefer to pay double the taxes on his carry?
“I actually think he can win… Whether you like it or don’t like it, what you’re getting is unfiltered and raw from a guy who’s writing his own cheques,” added Barrack, who famously orchestrated the sale of The Plaza Hotel to Trump back in 1988 (which Trump later lost in bankruptcy).
We’d like to gently remind Barrack that, under a Trump presidency, his own cheques would be significantly smaller. But we’ll have to wait until November to see how that shakes out.