Minority- and women-owned businesses join forces to oppose tax increase
A consortium of minority and women business leaders in the private equity, real estate, and investment management industries has announced the formation of the Access to Capital Coalition (ACC) to oppose efforts in Congress to change tax laws in a way that would adversely affect minority and women entrepreneurs. 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.
The Access to Capital Coalition will provide a unique and informative perspective to Congress on the unintended consequences of the legislation on minority- and women-owned investment management firms and the constituencies and markets that they serve.
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."
"I applaud and welcome efforts by Congress to support the working families that drive our economy, but this legislation as it is currently drafted will hinder those efforts," said Robert L. Johnson, chairman and CEO of The RLJ Companies.
Earvin "Magic" Johnson, Chairman and CEO of Johnson Capital Management, adds, "I strongly support the efforts of the ACC coalition and organizations like NAIC that are engaged in activities to support women and minority businesses."
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