This is a discussion that the private equity industry would rather have go away, but it won’t — so let’s look at the facts.
Part of the reason why Mitt Romney paid a 14% tax rate was because of the lower tax on carried interest income (15%). Part of the reason that income is taxed at such a low rate is because of lobbying on the part of the private equity industry.
See, the Obama Administration has suggested raising the 15% rate to the normal 35% before. This year, they said that closing the loophole could raise over $14 billion over 10 years. Joseph Rosenburg of the Tax Policy centre estimates (roughly) that it could raise about $2 billion a year. Still, in a 2010 vote on the matter every single Republican Senator (plus Democrat Ben Nelson) voted to keep the rate the way it is, says Bloomberg.
That said, who, specifically, is doing this lobbying and how much money are they doling out?
The most open private equity interest group by far has been the Private Equity Growth Capital Council (PEGCC), formed in 2007. There are 36 firms in the group including Blackstone Group, KKR, and the Carlyle Group. Bain joined at first but is no longer a member.
Last week the PEGCC announced that it would begin a campaign to educate Americans on the value of the industry called ‘Private Equity At Work’. Fair, given all of the information, misinformation, and outright political pandering about the industry that has gone on (and probably will continue) during this election cycle.
But that isn’t all the PEGCC does. It also has a Political Action Committee (yes, a PAC), and in 2011 its total lobbying expenditures totaled $2.2 million. In 2010 they spent $2.4 million, according to OpenSecrets.org. Most of that money was paid out to lobbying firms Akin Gump Strauss and Hauer and Capitol Tax Partners. Lawfirm Debevoise and Plimpton also got a substantial chunk of cash.
Big firms like KKR and Bain also hire lobbying firms on their own. According to Bloomberg, Bain spent $80,000 on the services of Public Strategies Washington Inc. in Q4 alone. Blackstone’s favourite lobbyist is Wayne Berman of Ogilvy Government Relations.
This election cycle, the PEGCC raised $267,115 and spent $98,122 of that. Their filings do not indicate that they’ve given to any individual federal candidate. However, you can take a look at which issues they have lobbied on — no surprise there, taxes rank number one followed by finance, banking and retirement in that order.