SBIA Comments to Tax Reform Working Groups

The Small Business Investor Alliance has submitted public comments to the House Ways and Means Committee Working Groups on Tax Reform. The comments discuss the tax reform goals of the lower middle market; explain how lower middle market funds are structured to prevent unnecessary tax compliance costs and make several recommendations to the committee to retain flexibility in partnership tax structures.

PRESS RELEASE

The Small Business Investor Alliance (www.sbia.org) today submitted public comments to the House Ways and Means Committee Working Groups on Tax Reform. The comments discuss the tax reform goals of the Lower Middle Market; explain how Lower Middle Market funds are structured to prevent unnecessary tax compliance costs; and make several recommendations to the Committee to retain flexibility in partnership tax structures.

“Tax writers have an opportunity to draft a tax code that encourages investment in small businesses through targeted incentives and reduced compliance costs,” said Brett Palmer, President of the Small Business Investor Alliance (SBIA), the premier organization of lower middle market private equity funds and investors. “Small business investors play an integral role in making capital available to our nation’s job creators and we are making sure tax writers hear their story before they end up on the proverbial chopping block. The best way to generate jobs in our country is to promote smart tax policy that supports investment in small businesses.”

SBIA comment letter #1 urges tax writers to keep the capital gains rate low and to make targeted tax relief to those that invest directly in “qualified small businesses.” SBIA offers recommendations that change the definition of “qualified small businesses” aiming to reduce compliance costs for investors and encourage direct debt and equity investments in small businesses. SBIA also makes it clear that smaller funds would be hit hardest if Congress changes the tax treatment of carried interest, and argues that Congress should preserve interest debt deductibility as a necessary business expense.

SBIA comment letter #2 was in response to the Committee’s recent tax reform discussion draft, which proposes major changes to partnership tax law. Because the partnership structure is the most common tax structure for private equity funds, any negative changes to partnership taxation will have a drastic effect on the ability of Lower Middle Market private equity funds to pool capital from investors and make it available to growing small businesses.

About the Small Business Investor Alliance:

The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA members provide vital capital to small businesses nationwide, resulting in economic growth and job creation. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for more than 50 years.