ABC News’ Yunji de Nies Reports: The White House today voiced their support of the Tax Extenders Act of 2009. The House bill’s primary objective is to extend tax provisions expiring at the end of this year in areas like technology and clean energy, among others. All told the bill would provide roughly $31 billion a year in tax relief.
In a statement the administration praised the proposal writing , “Since its establishment in 2000, this credit has stimulated private investment in economically depressed communities, helping to build schools and health care facilities as well as providing entrepreneurs with the resources to succeed.”
The bill is making headlines however, because it would change how carried-interest profits would be taxed – raising the rate from the current 15% to at least 35%.
The Private Equity Council, which represents large private-equity firms, released its own statement against the bill, saying that such an increase would create "a significant new tax burden on investment partnerships that wish to offer shares to the public--a provision that would discriminate among and between firms and further reduce important investments."
Critics of the carried-interest profits tax increase point out that on the same day the White House released their statement of support, they also released a separate statement, focused on job creation, touting the Recovery Act’s policy of a one-year elimination of the tax on capital gains from new investments in small business stock. They question why the administration supports tax-relief on capital gains tax for small businesses, but not on a larger scale.
The Private Equity Council echoed that sentiment writing, “Congress established a lower capital gains tax rate to encourage long-term investments that grow the economy. In the case of private equity, that’s just what has happened. In the past six years, private equity partnerships in the United States invested more than $240 billion in equity in American businesses. Congress should not put future investments at risk by raising taxes now.”