The Trump administration is executing their top campaign promises with haste and it is only a matter of time before they reach the issues that could directly impact private equity and M&A. Those issues include:
- Shifting the treatment of carried interest income from capital gain to ordinary income rates
- Lowering the tax rates
- Eliminating the deductibility of interest in leveraged buyouts
- Amending tax law to provide a “holiday” for U.S. multinationals to repatriate income earned overseas back to the U.S.
Each of these potential initiatives could substantially impact the motivation of professionals to work and make deals in private equity.
These issues have been talked about for decades with no chance of any real change, but this year is different. Ignore the popular press covering “alternative facts” and alleged voter fraud, and pay attention to the intel coming out of congress and the administration tied to these issues.