ALMOND: Congress should focus on tax reform that promotes growth

U.S. President Donald Trump points to a large "Merry Christmas" card on the stage as he arrives to deliver remarks on tax reform in St. Louis, Missouri, U.S. November 29, 2017. REUTERS/Kevin Lamarque

Business owners and investors in North Carolina are concerned about some members of Congress who support raising taxes on carried interest capital gains. Under basic tax principles, carried interest income earned from selling a capital asset held for more than one year for a profit is, and as a policy matter should be, taxed as a long-term capital gain.

Treatment of such income from carried interest as capital in nature is consistent with the tax treatment afforded to other long-term investments in capital assets and the fact that other entrepreneur-investors receive capital gains treatment, even if they borrow or raise third-party capital to make their investment. At a time when policymakers are trying to make the tax code simpler, fairer and more focused on driving economic growth, adopting a blended rate applicable to carried interest capital gains would do the exact opposite.

Raising this tax would negatively impact economic development, investment and job creation across the country. We currently hold a golden opportunity to reform our outdated tax code to benefit more Americans and stimulate economic growth.

Those who are proponents of higher taxes say it takes aim at “hedge fund guys,” but it will also hurt pension funds, charities and colleges that depend on these investment partnerships as part of their savings goals. This affects charities in small communities like ours.

If this change occurs, small businesses, innovators and inventors would find themselves increasingly shut out from investment money available to them from these partnerships. This is vitally important for rural North Carolina and communities like Stanly County whose job growth will come from small business growth.

As we move toward a more competitive tax structure, we need to make sure that we prioritize job creation and long-term business investment. For years Republicans have run on cutting taxes. The Reagan tax strategy had at its forefront creating an economic environment that allows businesses to drive our economy to new heights.

Much of this is what President Donald Trump has touted time and time again and Congress continues to be the roadblock. The 2016 campaign focused on revitalizing our economy, and Making America Great Again should consist of people being able to earn more money and give less to the government. Yet now, some Republicans in Congress and the White House are trying to tax the very people who drive our economy and the very people who elected Trump.

There are 188,274 N.C. jobs at private equity-backed companies and more than S14 billion in private equity investment in our state. Tax reform is an issue that matters to our state and impacts our communities directly. On top of that, the North Carolina Retirement System — with 630,000-plus members — has more than $90 billion in assets under management and invested $4 billion in private equity.

The top private equity-backed companies in this part of the state are Belk in Charlotte and American & Efird in Mount Holly. Conservatives need to lower the cost of doing business for small companies and private equity investments support more than 29,000 U.S.-based businesses. These businesses employ more than 11.3 million people in the United States. Private equity funds employ Americans in every state and locally here in Stanly County.

Rather than supporting proposals that lead to higher capital gains tax rates, Congress should look toward lower rates. Today, pro-growth tax reform is needed more than ever. It is imperative that lawmakers focus on tax reforms that promote innovation, investment and growth — and some of that already exists in our current tax regime. We need a 21st-century tax code that is simplified, puts more money in the pockets of our citizens, and does not impair those who are looking to invest and create more jobs.