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On yesterday's show Stephen Lerner from his Service Employees International Union SE IU.
-- private equity firms for workers not paying their fair share in taxes.
Here's what he had to say.
The buyout industry has a loophole.
That allows them to avoid taxes and what's going on right now -- people all over not just in this country but in other parts of the world Hussein.
If they're billionaires -- they've done extraordinarily well they should help pay taxes.
Instead of being subsidized by working people and so far from being deceptive what's going on it's all over this country people -- standing up and saying.
Let's cut out the loophole for the billionaire to have some tax fairness horrible today -- get the other side's take Roberts go to the private equity council joins us now from Washington Robert.
I assume you watched the interview because you -- the -- after it was over I mean I was pretty tough on Stephen.
About -- misrepresenting.
The -- because he was differentiating between.
Income tax and so called carried interest on some of the capital gains what is your response to Steve -- -- O'Brien good morning appreciate your having me on first of all I think if you judge their reaction to the events that took place yesterday.
It's pretty clear that certainly the news media and I think folks around the world.
Are much more interest and in the real problems that this country faces.
Whether it's gasoline.
Our housing or mortgage by the banking crisis than they are some of the street theater that the -- -- is engaged in.
You know it's very clear that the private equity industry.
Which has very simple business model has delivered significant benefits to the US economy -- -- the companies that they acquire and strengthen their hold over 456 years.
And to the public pension funds and endowments and foundations that invest in them.
It since the industry began they've returned more than.
A trillion dollars.
Largely to -- public pension funds and as I -- and I pointed out many the FC IU's own pension money has gone into KKR funds.
The very -- they were protest.
It is true that.
Of all the investments that are made with the top 100 private equity firms come from public pension funds.
That support the retirement security of teachers and firefighters and police officers.
Many of whom -- union members that's exactly correct.
All right well analysts I was -- one yesterday but I'll I'll you know I'm gonna take both sides of this and I agree with the position not.
Private equity -- necessarily but just I don't like taxes and general.
But the other side and he did make a fair point which is that do you think we need to have at least maybe a change in the way that.
The capital gains rate may -- not is taxed for partnerships but for win that money is transferred individual income.
I mean look let's just talk and let's make this very clear for for all your viewers private equity firms are taxed in exactly the same way that any other partnership is taxed.
They pay regular income rates of up to 35%.
On their salaries and fees and all their ordinary income.
And like every other partnership whether it's real estate or oil and gas or family business they pay capital gains rates.
On profits they -- from the sale of capital assets so their attacks in exactly the same way that every other partnership in America is -- If you -- have a debate about.
Partnership taxation vs corporate taxation.
Coming makeup regressive though right that we make it maybe scale up and say -- partnerships.
Of a certain kind at a certain income level just like income tax will scale higher would you support that.
Well I'm not a tax expert all all I'm here to tell you is if you want to have a debate about tax rates for partnerships tax rates on capital gains.
You know certainly that's legitimate debate to have what is not legitimate.
Is to try to single out one sector of the financial services industry.
For some kind of special tax treatment and that's exactly what the FTI is trying to do it by the way one day it's about tax policy.
Another day it's about interest deductibility another day it's about human rights what this really is about I think.
Is an effort by the SE IU to pressure certain private equity firms to intervene in appropriately in contract negotiations with some of the companies that -- So I don't think it's about you can't blame them -- but let's that's their job and I'm sure Robin if you are -- outside if you had that job at SE IU.
You would approach it with the same sort of aggressiveness that they have to because they feel like they don't have a voice.
Well there obviously an aggressive and and I think the idea of negotiating union contracts -- highly appropriate just for the record.
Many private equity owned firms have union contracts -- union workers.
Whether they're very large companies like Hilton Hotels or small companies like axle tech which is heavy duty auto parts auto drive train manufacture up in Michigan.
So it's not an issue about union representation.
It's an issue about whether or not to try to get -- to step in in the middle of negotiations.
Our Robert Stewart for the private equity council responding to the -- -- -- interview that we had yesterday robbery appreciate you coming up thanks very much Brian thank you very much for your time.
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