National Coalition to Fight Tax Increase
A consortium of minority and women business leaders in the private equity, real estate and investment management industries announced the formation of the Access to Capital Coalition (ACC) this week, to oppose efforts in Congress to change tax laws in a way that would adversely affect minority and women entrepreneurs. Women Entrepreneurs Inc. (WE Inc.), of which SBE Council President & CEO Karen Kerrigan founded, is a member of the coalition.
The 130 percent tax increase that HR 2834 would impose on much of the earnings of investment partnerships, would introduce additional challenges for minority- and women- owned investment businesses in gaining and maintaining access to capital. The legislation could also have a broader negative impact on entrepreneurs whose ventures are funded by investment firms.
H.R. 2834 would eliminate the 15 percent long-term capital gains treatment of investment partnerships profit shares -- generally referred to as carried interest -- and instead subject it to an ordinary income tax rate of 35 percent. Similar proposals are being considered in the Senate. Particularly hard hit, though, will be small and mid-level firms - the level at which most minority and women investment and management firms operate today.
Coalition members include the National Association of Investment Companies (NAIC), which is comprised of many of the nation's largest African American, Hispanic, Asian, and minority women-owned private equity and venture capital firms, the Association of Asian American Investment Managers (AAAIM), and Women Entrepreneurs Inc. Willie E. Woods, Jr., Managing Partner of ICV Capital Partners, New York, NY and Chairman of NAIC and a founding member of ACC, indicated that "the present carried interest policy has been essential to attracting top talented minorities and women to the industry as independent firms and fund managers. Its elimination, consequently, would have the unfortunate effect of impeding this great progress."
According to Luis G. Nogales, Founder and Managing Partner of Nogales Investors, Los Angeles, CA, "this legislation, regrettably, not only could hinder the progress that minority firms have made in the private investment industry, but could also discourage important economic activity in key places, especially concerning investments in ethnically diverse communities and small businesses."
SBE Council's letter opposing H.R. 2834:
Karen Kerrigan, President & CEO SBEC
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