On Wednesday, September 19th, the Penn community will have an opportunity to hear from Robert Friedman (L’67), a Senior Managing Director and Chief Legal Officer of the Blackstone Group L.P. Mr. Friedman has worked mainly in Blackstone’s Private Equity group, one of the most prominent equity firms in the country. Always at the forefront of tax policy, Penn Law’s own Michael Knoll has recently released a paper entitled The Taxation of Private Equity Carried Interests: Estimating the Revenue Effects of Taxing Profit Interests as Ordinary Income. The paper has been downloaded about 600 times since its August 19, 2007 posting. (The blogosphere is taking note as well.) As Professor Knoll’s faculty liaison, I assisted with the research on this paper. Several days after Professor Knoll’s paper became available on the Social Science Research Network web page, he was interviewed by Ryan J. Donmoyer of Bloomberg.com. The article states:
Congressional efforts to more than double taxes on managers of private-equity firms will generate little or no additional revenue to help pay for middle-class tax cuts that many lawmakers are seeking, a new study shows. Buyout and venture-capital firms will restructure their affairs to sidestep any new tax laws aimed a[t] their executives, according to the paper by Michael Knoll, a law professor at the University of Pennsylvania in Philadelphia.
Bloomberg is not alone in writing about private equity firms. Just last week, I read an Associated Press article that provides an overview of the House and Senate bills that propose to raise taxes on private equity and hedge funds. The Senate Finance Committee even has transcripts and videos of its hearings on the matter; just look for the hearings called “Carried Interest.” Next week, the Penn Law community will have an opportunity to add its own voice to the ongoing and lively dialog on this topic. For now, if you’re interested in learning more about private equity firms, or you have come across some resources on your own that you think I might find interesting, let me know!