The WSJ’s Dennis Berman just finished interviewing Apollo Management boss Leon Black, as the closing keynote to Dow Jones’ PEA Outlook Conference. Lots of talk about distressed debt and private equity’s recent record, but the most notable exchange was Black’s view of carried interest tax treatment.
Berman asked Black to imagine he was called to testify in front of a Congressional committee. How would he succinctly argue in support of keeping carried interest taxed as capital gains?
“I’m not sure I would,” Black replied. “It wouldn’t be the worst thing in the world to have some adjustment… I don’t think it should be ordinary income, but maybe something in between.”
No other private equity investor of Black’s stature has ever said such a thing publicly ( Jon Moulton and Leo Hindery are not of Black’s stature). Berman didn’t press Black on why he differs from almost every one of his peers, but it’s a minor quibble. PE pros have spent years — and tons of lobbying dollars — trying to convince legislators that they’d support current tax treatment is they only had a better understanding of private equity. Now, those legislators can reply: “What do you know about private equity that Leon Black doesn’t?”