‘ENTERPRISE-VALUE TAX’

            “After President Obama was sworn in [2009], he was cautioned by Treasury Secretary Tim Geithner not to go after high finance too hard. Geithner worried about imperiling the fragile recovery, and he wanted to coax financiers into accepting other industry reforms. Even so, by 2010, when the recession had officially been over for several months, congressional Democrats were talking about closing the carried-interest loophole with renewed seriousness.

            “At the time the Carlyle [Group] and other firms were public offerings, and the industry lobbied seized on a little-discussed element of the reform efforts: the ‘enterprise-value tax,’ in private-equity parlance. Raising taxes on carried interest would apply not just to a partner’s regular pay but also to the sale of a stake in the firm. [Stephen] Schwarzman, who still held a sizable stake in Blackstone, was particularly upset. Later, he described the peril as a ‘war.’ He said, ‘It’s like when Hitler invaded Poland in 1939.’ (He was widely criticized for the analogy, and later apologized.)”

Alec MacGillis, “The Billionaires’ Loophole,” New Yorker, March 14, 2016, pp: 64-73.