All of the sudden, the Obama administration and Democrats aren’t the only ones saying the 15% rate private equity managers pay on carried interest should be raised.According to the FT, Germany and Sweden are both considering measures to raise the rate and Joe Dear, the investment chief of California pension fund CalPers, had some strong words about it.
“General partners [in private equity companies] should recognise that tax treatment of their income has become indefensible,” Mr Dear said late on Monday.
CalPers, it’s worth noting, is one of the world’s biggest investors in private equity with investments in industry heavy hitters like Blackstone, Carlyle and KKR. As for Germany and Sweden, you have to think that Europe could follow their lead. Sweden’s considering retrospectively charging executives at Nordic Capital, IK and Altor a 56% tax rate, plus a 40% penalty on past taxes.
One UK PE exec basically said that these are just the breaks:
“We should stop whingeing about the tax and carried interest … this is an anomaly and it should and will get changed,” the head of a large UK buy-out group said. “People are very concerned about inequality and we have to recognise that and get on with our life.”