CEI Joins Coalition Opposing the Wall Street Looting Act
Dear Senators Warren & Kennedy,
We are writing to express our concern about the upcoming hearing in the Senate Banking Economic Policy Subcommittee titled “Protecting Companies and Communities from Private Equity.” More specifically, we are strongly opposed to legislation like Senator Warren’s Stop Wall Street Looting Act, which would increase taxes, stifle private investment, eliminate jobs, and threaten the life savings of Americans across the country. We urge the Committee to reject this legislation and any similar legislation that would harm workers, retirees, and pensioners.
It appears that Senator Warren is using this subcommittee hearing as an opportunity to reintroduce and highlight her Stop Wall Street Looting Act, a dangerous bill that could crush thousands of businesses at a time when the economy is still trying to recover from the COVID-19 pandemic. The bill is concerning for a number of reasons:
• Tax increases on investment: By sharply raising taxes on long-term capital gains, the bill would dampen returns of universities, startup ventures, and pensioners. Raising taxes on carried interest is part of a long-running campaign by some to raise taxes on all capital gains investment. A recent study found that raising taxes on carried interest could eliminate up to 4.9 million jobs and cost pension funds up to $3 billion per year. The bill also creates a 100% surtax on certain fees and denies legitimate interest deductions for disfavored private companies.
• Imposes new mandates: The bill penalizes private investment based entirely on the ownership structure of the underlying businesses. The legislation would impose new and onerous legal liabilities on private investors and managers that do not exist for other investors, including through a radical rewrite of the bankruptcy code. These liabilities would make it exceedingly difficult to invest in struggling businesses.
• Penalizes workers & retirees: These new regulations would make it harder for pension funds to generate stronger returns for the teachers, fire fighters and public-sector workers whose retirements depend on the
performance of these investments. The bill could also cost investors as much as $3.36 billion each year, with almost half of the loss accruing to pension fund retirees.
• Eliminates jobs: Senator Warren’s legislation would erase anywhere from 6 to 26 million jobs from the American economy and reduce federal, state and local tax revenue by as much as $475 billion each year, according to a study by the United States Chamber of Commerce.
As we have seen time and time again throughout history, when you tax and overregulate an activity, you get less of it. Unfortunately for workers and retirees across the country, the result of the Stop Wall Street Looting Act would hurt the livelihoods of the 11.7 million workers directly employed by private equitybacked companies.
In 2019, when Senator Warren introduced the Stop Wall Street Looting Act, the Wall Street Journal noted that “every policy she proposes would increase government control over the private economy.” Unfortunately, the newest version of the bill stays the course. Instead of attacking private sector employers with legislation like the Stop Wall Street Looting Act, we urge the Subcommittee to focus on solutions that will empower workers.
President, Americans for Tax Reform
President, American Commitment
Krisztina Pusok, Ph. D.
Director, American Consumer Institute
Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity
President, Center for a Free Economy
Andrew F. Quinlan
President, Center for Freedom and Prosperity
President, Center for Individual Freedom
President, Council for Citizens Against Government Waste
Vice President, Competitive Enterprise Institute
President, Consumer Action for a Strong Economy
Vice President, Heritage Action for America
President, Frontiers of Freedom
President, Institute for Liberty
President, Less Government
Executive Director, Open Competition Center
Executive Director, Shareholder Advocacy Forum
Saulius “Saul” Anuzis
President, 60 Plus Association
Founder/Chairman, 60 Plus Association
President & CEO, Small Business & Entrepreneurship Council
President, Taxpayers Protection Alliance
CC: Full Senate Banking Committee