US Republicans reject private equity tax hike
Senators knock back plans to increase capital gains tax in the private equity sector from 15% to 35%
The private equity industry has been given a boost after Republican senators
blocked plans to hit companies with a 35% capital gains tax rate.
The decision will be seen as a key victory for the industry because private
equity companies will avoid an extra $6bn (£2.9bn) in taxes for which they would
have been liable if the proposals had been pushed through.
The tax increase was put forward by Charles Rangel, a Democrat Congressman,
but the move, which needed the approval of 60% of the Senate was shot down after
Republican senators blocked it.
Private equity companies had argued that since the bulk of employees’ pay
packets came from investment profits, any change to the carried interest regime
would have a significant impact.