President Barack Obama’s $447 billion jobs proposal includes a provision that would treat carried interest as ordinary income. The aim would be to raise an estimated $18 billion to help pay for the proposal, according to sister news service Reuters.
Carried interest, the profit-share that buyout fund managers pocket when they sell companies, is taxed at the 15 percent capital gains rate. Under ordinary income treatment, that profit could be taxed as high as 39.6 percent in 2013. The president, as well as select legislators, have proposed taxing carried interest as ordinary income several times in recent years in their pursuit of more revenue.
Antitrust Inquiry Broadens
A federal judge on Sept. 8 broadened the scope of a four-year-old investigation into whether private equity firms colluded to control prices far large buyouts during the boom years of the last decade.
The Federal District Court in Massachusetts ruled that plaintiffs could seek information about 10 more deals, including the largest buyout ever: the $44 billion deal led by
The complaint, filed in 2007, alleges that in these so-called “club deals” buyout firms conspired to keep prices down for companies they pursued. Until this latest development the case was limited to 17 leveraged buyouts, including SunGard Data Systems, which seven firms, including
The defendants, which say the accusations have no merit, have spent more than $100 million in legal fees defending themselves in the case, the Times reported. Executives deposed in the case have included Steve Pagliuca of
California, Illinois, Top PE States
Private equity firms invested in more companies in California than in any other state in 2010, according to a study of the geographic dispersion of private equity investment conducted by the industry’s trade group, the Private Equity Growth Capital Council. More than $16 billion was invested in 195 companies in California.
The other top four states were Illinois, New York, Texas and Connecticut, the study found. Kansas rounded out the top 20, with 12 companies receiving nearly $1.4 billion. Overall, private equity firms invested more than $1 billion in 21 states in 2010, the study found.
Ever mindful of politics, the PEGCC noted that the most popular Congressional District for investment was that of Rep. Danny Davis, a Democrat representing Illinois’s 7th congressional district, in which private equity firms invested $8.5 billion in 21 companies. The other most popular districts were those represented by Reps. Jim Hines, Democrat of Connecticut; Ileana Ros-Lehtinen, Republican of Florida; Nancy Pelosi, Democrat of Calif.; and Trey Gowdy, Republican of South Carolina.