Would Changing the Tax Treatment of Carried Interest Hurt Minority-Owned Businesses or Low-Income Communities?
The Wall Street Journal recently reported that the Private Equity Council of America is funding a coalition (the “Access to Capital Coalition”) that argues that taxing carried interest as ordinary income would reduce investment in minority-owned businesses and low-income communities. (The group also appears to be arguing that the tax change would reduce the represenation of women and minorities in the private equity industry itself; this argument is addressed in the box on page 6.) To accept this argument, one would have believe both that the tax change would significantly reduce the amount of investment funneled through private equity funds and that the redirection of some investment from these funds to other investment opportunities would hurt minority-owned enterprirse and low-income communities. Neither of these claims is credible. • Changing the tax treatment of carried interest is unlikely to signficantly reduce the amount of investment funneled through private equity funds. As e
