Steve Forbes takes Congressional proposals to boost taxes on private-equity companies to task:
The Baucus-Grassley legislation in the Senate and the Levin bill in the House to hike levies on private equity and overhaul the taxation of publicly traded partnerships are dangerous. They will inevitably harm American investors and our overall investment climate.A Democratic controlled Congress just can't resist the opportunity to kill a goose that lays golden eggs. Do you realize that the U.S. already has the second highest corporate tax rate in the world? The proposals to double or triple the amount of taxes private equity companies pay won't do anything but diminish the public benefits these economic engines provide.[. . .]
Between 1991 and 2006, private equity firms world-wide created more than $430 billion in net value for investors -- which include universities, charitable organizations and pension plans covering tens of millions of Americans. Thus the superior investments of private equity firms translate into stronger pension plans, more financial aid, and scholarships at public and private colleges, and more funds for research to cure or treat diseases.
Private equity firms provide better than average returns for some of the nation's largest public pension funds, benefitting teachers, students, police officers, firefighters and enabling several states to avoid budget cuts or tax increases that would have otherwise been required to meet their obligations to retirees who have devoted their careers to public service.
Just like adopting the now reviled Alternative Minimum Tax to soak it to the rich, raising taxes on private equity firms will have unintended consequences. In the end, regular folk like you and I will be the ones that pay.
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