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Axios
21-04-2025
- Business
- Axios
Exclusive: Drew Maloney to head Edison Electric Institute
Drew Maloney, the head of the American Investment Council, is leaving to serve as the next president and CEO of Edison Electric Institute, Axios has learned. Why it matters: EEI, the trade association for investor-owned electric companies, is bracing for a potentially transformative time, as the industry works to provide power for AI data centers and EV charging stations. Maloney, a top Treasury official in President Trump's first term, will succeed the current interim president and CEO Pat Vincent-Collawn, who stepped in for Dan Brouillette. Brouillette, a secretary of energy in Trump's first term, announced he was leaving EEI last year and recently joined the strategic advisory firm Torridon Group as co-chair. Maloney will start at EEI on July 1. What they are saying:"Drew Maloney's extensive public policy expertise, financial and energy sector work, and trade association leadership will be a tremendous asset to EEI member companies and the millions of customers we serve," said EEI Board Chair Maria Pope in a statement. "As AI transforms our industries, manufacturers return to our shores, and daily life becomes more electrified, the strength and resilience of America's energy grid is more critical than ever," said Maloney. Go deeper: The AIC, which represents the private equity industry, has launched an ad campaign to retain the current tax structure around carried interest, which Trump wants to tax as regular income. Staying at AIC through June will allow Maloney to help quarterback that effort, if the details of Trump's "one, big beautiful bill" are ironed out over the next few months. At EEI, Maloney will help meet Trump's call for more electricity generation to power the manufacturing renaissance he campaigned on.
Axios
28-03-2025
- Business
- Axios
Private equity preps a two-part tax fight
Private equity is ramping up for this summer's federal tax fight, and carried interest isn't the only break on the block. Why it matters: The future of Wall Street economics may be decided on K Street. Driving the news: The American Investment Council is launching a 7-figure ad campaign that sounds a lot like PE image rehab, Axios' Hans Nichols reports. Its primary interest is maintaining the status quo on carry, the portion of investment profits kept by fund managers, over the objections of President Trump. Just as it did back in 2017, albeit with a much bigger GOP House majority. Zoom in: The industry also wants limitations on corporate tax deductions for interest to be calculated via EBITDA rather than via EBIT — adding depreciation and amortization to the formula — given how many of private equity's portfolio companies are leveraged. This change was made in 2017, but then it sunset at the end of 2022. AIC has partnered with several other trade groups to ensure that the new tax bill reverts to the base text of 2017, which was supported by Trump, although it could be a heavy lift given all the other new tax breaks that are being proposed (tips, overtime, Social Security, SALT, etc.). State of play, per Axios' Stef Kight: The Senate will vote soon on the updated budget resolution, and then kick it back to the House. Their goal is to get done before they take their two-week recess around Easter. And then the real haggling begins in earnest The recent CBO report saying the debt ceiling must be dealt with by August or September is probably a helpful forcing mechanism.
Yahoo
26-03-2025
- Business
- Yahoo
Musk's War on Delaware Spurs Bill Pushed by Private Equity
(Bloomberg) -- The lobbying powerhouse for the US private equity industry has thrown its weight behind a controversial bill to overhaul Delaware's corporate laws, which could make it harder for shareholders to beat companies and executives in court — a long-simmering campaign reignited by Elon Musk. They Built a Secret Apartment in a Mall. Now the Mall Is Dying. Why Did the Government Declare War on My Adorable Tiny Truck? Trump Slashed International Aid. Geneva Is Feeling the Impact. Chicago Transit Faces 'Doomsday Scenario,' Regional Agency Says Paris Votes to Make 500 More Streets Car-Free A team of five lobbyists hired by the American Investment Council, which is funded by the likes of Blackstone Inc. and KKR & Co., has been pressing lawmakers to support the bill. If passed into law, the 'billionaires' bill,' as some detractors call it, would lower the standards for insider deals involving controlling shareholders and for rich compensation packages for founders like Musk. An army of professional influencers has been 'swarming the statehouse,' as one legislator put it. The bill passed the state House of Representatives on Tuesday evening, and is on its way to be signed into law. The legislation comes after growing criticism that the state's corporate law has become obstructive. But the effort gained new urgency when Musk, the world's richest person, gave Delaware a scare by reincorporating his companies in Texas and Nevada. He acted after the Chancery Court's chief judge shot down his Tesla Inc. pay package, the largest ever awarded to a business leader. Big Stake Private equity firms have a big stake in Senate Bill 21 because they often retain a significant holding in companies after listing them through initial public offerings, exposing them to potential shareholder lawsuits that can drag on fund returns. Among the PE players, the biggest firms have the most to gain from the bill, since it may help contain shareholder suits in take-private or take-public transactions, said Bill O'Neil, a partner at Winston & Strawn who advises corporations and private equity firms. 'There is no bad news here for private equity,' O'Neil said. Critics of SB 21, including public pension funds and shareholder advocacy groups, say fears of a corporate exodus are overblown and have been conjured up to push through a giveaway to billionaires and powerful corporate insiders at the expense of smaller stockholders. 'The lobbying over this bill is getting intense,' Delaware Representative Sophie Phillips, a Democrat who opposes the bill, said before the House vote. 'Lobbyists for both sides have been swarming the statehouse. This is the most intense lobbying I've ever seen on a single piece of legislation.' Going Too Far? Phillips said she's concerned that advocates for a less intrusive body of corporate law are going too far in loosening the reins on controlling shareholders and will make Chancery Court unfriendly to shareholders seeking to rectify corporate wrongs. The legislation defines that control with specific parameters, which could make it harder for an investor to show that an influential founder, for example, owed shareholders a fiduciary duty in vetting an acquisition or pay package. It also strengthens the presumption of director independence so it can't be as readily called into question by shareholders who don't like such a deal. And it cuts down on the range of records smaller shareholders can access in building a case. The bill, which advanced out of the state Senate on a 20-0 vote, passed the state House of Representatives 32-7. The private equity industry, like others, has fired a warning shot: It could be part of a wave of companies that might leave Delaware, unhappy with court rulings against controlling shareholders. The bill provides 'needed predictability' to Delaware law as private equity firms have been considering 'their options relating to the incorporation of new and existing companies,' Will Dunham, executive vice president for government affairs at the AIC, wrote in a March letter to the Delaware General Assembly. Dunham urged the body to adopt the bill because it offers 'greater predictability' for 'deciding where to incorporate, what directors to select or how to execute a going-private transaction.' Meta and Walmart Delaware has long been the preferred corporate home to big companies, including private equity firms, because of its generally business-friendly environment and its Chancery Court judges, business law experts who hear cases without a jury and usually much faster than other courts. More than 60% of Fortune 500 companies are incorporated in the state. But it has proved vulnerable to critics like Musk, 53, who not only left but used his social media platform X to encourage others to follow him. Dropbox Inc. and TripAdvisor Inc. did just that, while fund manager Bill Ackman has said his management company will do the same. After news that Meta Platforms Inc. was also considering decamping, Governor Matt Meyer invited company executives to a Sunday meeting, and the bill ultimately followed, according to records cited by CNBC. Meta, led by controlling shareholder Mark Zuckerberg, has been sued in Chancery Court by a pair of pension funds seeking internal documents to help determine whether its leadership is to blame for a $1.3 billion European Union fine over its privacy practices. The company declined to comment. Meanwhile, Walmart Inc., the world's largest retailer, has lobbied for the bill. Even in deep blue Delaware, where both legislative chambers are controlled by Democrats, a bill favored by big business is on track for the Democratic governor's signature — a measure of how important the distinction, and revenues, of the nation's premier business court is to the state. Incorporation fees make up nearly a third of its annual budget. Proponents say the bill doesn't represent a radical overhaul but instead creates a road map for companies to follow for better governance. And they like to remind Delaware of all it has to lose. Multiplier Effect Blake Rohrbacher, a lawyer at Richards, Layton & Finger, says he has held discussions with private equity firms about possible conversions to other states. His firm helps represent Tesla in the Musk pay case, which is on appeal, and was among various parties that offered suggestions to a panel that drafted the bill. 'The loss of one significant private equity company to another state represents far more than one corporation,' Rohrbacher said. 'It would mean the loss of tens or hundreds of other corporations, as the entire structure would move and new corporations would not be formed here.' The bill's adversaries say they're outgunned in the lobbying showdown. 'The proponents have far more resources,' said Joel Friedlander, a plaintiff's lawyer at Wilmington-based Friedlander & Gorris. 'But we are doing what we can to educate the public and the General Assembly about how Delaware's governor and legal elite want to rebrand Delaware as a place where the judiciary cannot oversee self-dealing by billionaires.' A spokesperson for the governor declined to comment on Friedlander's remarks. --With assistance from Jef Feeley and Riley Griffin. (Updates with Delaware House vote results in third paragraph.) Google Is Searching for an Answer to ChatGPT Business Schools Are Back The Richest Americans Kept the Economy Booming. What Happens When They Stop Spending? A New 'China Shock' Is Destroying Jobs Around the World How TD Became America's Most Convenient Bank for Money Launderers ©2025 Bloomberg L.P. Sign in to access your portfolio
New York Times
08-03-2025
- Business
- New York Times
Trump Wants to Kill Carried Interest. Wall Street Will Fight to Keep It.
Nearly a month has passed since President Trump last spoke publicly of his desire to kill the carried interest loophole. (Yes, we know, some of you don't consider it a 'loophole.') And yet the private equity industry, which stands to lose big if the president upends the tax break, is still bracing for a fight. This is the biggest challenge to the provision since it was nearly neutered three years ago under former President Joe Biden. A reminder: the carried interest rule means that executives at hedge funds and P.E. and venture capital firms pay roughly 20 percent tax on their profits, a rate that's so low it's drawn criticism from Warren Buffett and from progressive senators like Elizabeth Warren, Democrat of Massachusetts. One Washington lawyer described the lobbying effort to DealBook as 'significant,' a sign of the escalating stakes. Consider what's happened in the past month: The American Investment Council, the private equity lobbying group, is reportedly circulating memos on Capitol Hill reminding lawmakers that private equity is a jobs creator. Venture capitalists, seemingly omnipresent in Trump's Washington, grumble that they have to keep returning to Congress to 'educate lawmakers' about the rule's benefits. So-called free market groups, meanwhile, have banded together to ask Congress to maintain the status quo. 'They'll fight tooth-and-nail on any sort of change,' said Jessica Millett, a tax partner at Hogan Lovells. The carried interest lobby is made up of wealthy real estate, venture capital and private equity groups, including Blackstone and the Carlyle Group. The American Investment Council, the National Venture Capital Association, and the Real Estate Roundtable have long gone to great lengths to defend their favorite loophole. 'It's really an evergreen point of contention for these trade groups,' Jonathan Choi, a law professor at the University of Southern California, told DealBook. What's different this time: It's hard to decipher how serious Trump is about killing it. Trump has long railed against carried interest, saying a decade ago that hedge fund managers exploiting the tax code were 'getting away with murder.' Behind the numbers: Eliminating carried interest would save the government an estimated $14 billion over 10 years, according to the nonpartisan Congressional Budget Office. Trump is on the hunt for far bigger savings if he is to pass his 'big, beautiful' tax bill in coming months without blowing up the deficit. Trump wanted to kill carried interest in his 2017 tax bill, only to give up amid opposition from lobbyists and Republican lawmakers, said Victor Fleischer, a law professor at the University of California, Irvine. And now? 'People think that it's cheap talk,' Fleischer said. But there are some in Democratic circles who believe that Trump may be more serious now than he was in 2017, DealBook hears — not least because those are the signals that they're getting from the White House. Trump's disdain for carried interest is a rare fracture between him and Republican lawmakers. Traditionally, Democrats have been behind efforts to kill it, and when Trump renewed his call to eliminate carried interest this month, congressional Democrats — not Republicans — were ready with stand-alone bills to do just that. But Trump may finally be eroding G.O.P. unity. Republican senators John Cornyn of Texas and Thom Tillis of North Carolina, both members of the Senate Finance Committee, said in recent weeks that they were open to considering changes to the rule. The last threat to carried interest came in 2022 when former President Joe Biden's Inflation Reduction Act included a provision to kill it. But before the vote, lobbyists bombarded the office of Senator Kyrsten Sinema, the former Democrat (and then Independent) of Arizona, with calls urging her to vote against the bill. Sinema ultimately voted for the bill, but only after carried interest was spared. Lobbyists worry about G.O.P. defections, but see holding Republicans as easier than the last go around when they had to flip a pivotal on-the-fence senator. 'They don't need a Sinema to save them,' said Fleischer. Short of killing the rule, Congress could reform it as a way to pacify Trump. Hogan Lovells' Millett said there's significant industry concern that Congress will gut much of the rule's usefulness by including measures like extending the qualifying holding period from three years to five years before the carried interest tax break kicks in. Such an extension could scramble the way these firms do business. Private equity firms, for one, are often able to hold onto investments for five to eight years, Millett said. Fleischer, the law professor, kick-started the debate on carried interest two decades ago when he detailed how the provision works in a widely read academic paper. Reform or no reform, he believes the loophole is here to stay. It 'will outlive us all,' he said. The labor market continued its steady growth. The nonfarm payrolls report showed employers had added 151,000 jobs last month, roughly in line with Wall Street expectations, and extending the job-growth streak to 50 months. That said, the effects of the Elon Musk-led job cuts by his Department of Government Efficiency will likely not show up in the labor market data for another month or two. Tariff uncertainty prompts a major stock sell-off. Despite yesterday's late-afternoon rebound, the S&P 500 ended the week sharply lower. A variety of factors have spooked investors, including fears of a downturn and concerns that President Trump's on-again-off-again tariffs policy will create a major disruption to global trade. A recap: Trump gave Mexico and Canada a partial tariff reprieve — exempting levies for one month on products covered by the U.S.-Mexico-Canada Agreement, the trade pact Trump signed in his first term. But more levies, including on aluminum and steel, are set to go into effect next week. Elon Musk blew up at Cabinet officials at a White House meeting. One of his targets was Marco Rubio, Maggie Haberman and Jonathan Swan report for The Times. The tech mogul turned President Trump's cutter-in-chief fumed that the secretary of state had fired 'nobody.' Trump eventually defended Rubio, and set ground rules. Cabinet chiefs are to run their departments, and Musk is to act as an adviser, the first clear sign the president is willing to put limits on the billionaire's power in Washington. Several tech start-ups weigh going public. CoreWeave, a seller of cloud-based Nvidia processing power, filed to go public on Monday, putting itself in position to become the year's first major technology I.P.O. (The company denied a report that Microsoft, by far its biggest customer, was shedding some of its contracts with the start-up.) Other companies have also talked with bankers about following suit, DealBook's Lauren Hirsch and The Times's Mike Isaac reported, including Discord, the social chat app, and StubHub, the ticketing software company. The future of news looks niche In 2013, Jessica Lessin, a reporter at The Wall Street Journal, left the paper to start a competing publication, The Information. A few years later, her fledgling newsroom had grown to nearly two dozen reporters and editors and booked more than $20 million in sales, as she revealed in a profile I wrote for The Times's Sunday Business. She says she has since doubled her editorial staff and continued to stay profitable, with revenue growing 30 percent in 2024 over the previous year. But it's her investments outside of The Information that are gaining attention these days. Her company Lessin Media has put money into Semafor, The Ankler, the former Business Insider editor Nicholas Carlson's Dynamo, Kevin Delaney's Charter Works and other titles at a time when the news business appears bleaker than before. Lessin, however, is optimistic. I caught up with the entrepreneur about her latest media bet, the tennis publication Racquet magazine, and what she thinks about the changing news landscape. This interview has been edited and condensed. This investment seems different from your others. How did you come to it? I actually got introduced to Racquet by a number of fans of the magazine. And it was like the weirdest experience, because I was reading the magazine, and then I wanted to buy, like, all the clothes in the magazine. I went to the website, and I wanted to buy all the merch. And they're hosting an event at the U.S. Open. And I was like I want to go to that. And I want to read this great profile about the mental coach behind the world No. 1 tennis player. This sounds like it was something that just struck you personally. I assumed you'd be more focused on sales and market size and margin. It's absolutely both. I'm absolutely all about revenue and controlling your destiny and direct subscription revenue, and that being the true north. I've also always been about that founder that has the real expertise. And I think big media companies dismiss the niches. They think they're too small. Across all of these investments, the criteria I'm looking for is there's got to be real revenue and a revenue model that is direct and user-driven where the brands can control their own destiny. But also a very passionate founder. Subscriptions are a big part of your media thesis. Do all the companies you invest in have that component? Not all do. You know Nich Carlson's new company, Dynamo, that I invested in, I don't think they do yet, but all the companies have plans and road maps. You mentioned that big media companies are missing the picture on niche publications. Is that the future of news? Or at least one way to be successful? Yes, absolutely. Are legacy newsrooms too focused on the old model? I do think that many of the large media organizations haven't gotten the memo fully. I mean, it's fascinating to watch The Wall Street Journal integrate its tech coverage with its media coverage. You're talking about how The Journal recently cut some tech reporters and combined it with the media team. Yeah. Of course, it comes in a landscape where there have been a lot of layoffs across different teams and publications and it's very sad. It's my alma mater, there are wonderful people there. But what's so interesting to me is the idea of consolidating different thematic areas. At The Information, our formula is just very different. It's going very, very deep into subject matters, into beat reporting. I think the most ambitious, world changing, impactful stories come from gathering string around companies and people and areas of expertise. And I worry, because I see a lot of other newsrooms with very talented reporters put those reporters on very broad and enterprise-like beats. How can we hold companies and leaders accountable without that kind of reporting day in and day out? You've invested in seven media start-ups. Are you going to do a roll up? I am very actively trying to do deals that would enhance The Information and that are related to it — being the authority on tech — so rolling up things like that within The Information, absolutely. But most of our investments don't fit into that category. It's just me believing so much in the founder and what they're building. But I am absolutely a believer that there will be opportunities for The Information to acquire a number of companies in a lot of different areas. The big media story right now is The Washington Post, and since we're talking about investment opportunities, my old boss, Kara Swisher, is out there trying to get people together to buy it. What do you think? I texted her when I saw it, and I was like, 'You go!' I am all for passionate journalists trying to help shape the future of news businesses. She's certainly one of those. I think she's also a pundit, and I think that can get in the way of some types of journalism. But for people who really love news and love brands and want to shape them, that's the kind of transformation that's going to serve readers really well. But there's no way Jeff Bezos is going to sell The Washington Post. Do you know something? I have no inside information. I just think Jeff Bezos is finally flexing a little, and by that I mean his announcement that the opinion pages would now primarily reflect 'free markets and personal liberties' or however he said it. Do you think it was a good move? I do believe that as the owner of a publication it makes sense for them to shape a point of view of their opinion pages. But it's way too early to tell. Let's see what he writes. Yeah. And that's not a move you make if you're trying to offload something. That's a move you make when you are establishing yourself as a proprietor. He's really digging in. You can read the full interview here. Thanks for reading! We'll see you tomorrow. We'd like your feedback. Please email thoughts and suggestions to dealbook@
The Hill
12-02-2025
- Business
- The Hill
Republicans weigh ending Wall Street's favorite tax break
Republicans are considering doing away with one of Wall Street's favorite tax breaks at the encouragement of President Trump, one that has long enjoyed Republican support and that could put up yet another obstacle on the road to a tax bill. The tax break on carried interest — often called the carried interest loophole — allows the managers of investment funds such as private equity firms and hedge funds to count their income as capital gains and thereby have it be subject to a lower tax rate. The tax rule, which has been debated by lawmakers for more than a decade and has come within a hair's breadth of getting canceled in previous legislative fights, would affect compensation levels at some of Wall Street's most powerful firms. Republicans say that canceling the tax break would improve the public perception of their tax law, which includes many tax breaks for business owners and other taxpayers at the top end of the income spectrum. '[Trump] thinks it's a little unfair that one sector of industry gains a lot by using [carried interest] as part of their income and paying lower capital gains. President Trump doesn't want to see anything perceived as unfair. Certainly for the wealthy, he wants to make sure that all of America gets the benefit of this tax bill. And I agree with him,' Rep. Dan Meuser (R-Pa.) told The Hill. Rep. Rick Allen (R-Ga.) said that nixing carried interest would help to break the image of Republicans as advancing the interests of America's richest taxpayers. 'We get accused of just looking after the wealthy — and this would include the wealthy,' he said. 'With the momentum in the country, I don't think folks will mind paying a little more to make sure we get this done.' Carried interest is controversial because it allows the income of a hedge fund or a private equity firm, which usually pass their tax bills on directly to their owners, to be treated as a capital gain. Capital gains at the upper end of the income spectrum have lower tax rates than ordinary wage and salary income. While fees charged by these firms are taxed as regular income up to a top marginal rate of 37 percent, the tax rate on the interest they get paid comes at a top rate of 20 percent plus a net investment income tax of 3.8 percent — substantially lower. Private equity companies are dead set against canceling the tax break. 'We encourage the Trump administration and Congress to keep this sound tax policy in place and unleash more long-term investment,' the American Investment Council, a trade group for the private equity industry, said in a statement. The Congressional Budget Office (CBO) estimated last year that taxing carried interest payments as ordinary income would decrease the deficit by just $13 billion over the subsequent decade — a drop in the bucket of the $36 trillion national debt and little more than a feather on the scale of the $4.7 trillion burden of extending the 2017 Trump tax cuts. However, ending the tax break could make extending the Trump tax cuts seem more egalitarian, Republicans said. According to one distributional analysis of the extensions by the Institute on Taxation and Economic Policy (ITEP), the richest 1 percent would receive an average tax cut of around $36,300 while nearly all other income segments would actually see a tax increase. 'The hike on the middle 20 percent [would be] about $1,500 and the increase on the lowest-income 20 percent of Americans [would be] about $800,' ITEP policy director Steve Wamhoff and his co-authors found. Amid such a skew, Republicans are seeing the appeal of targeting a Wall Street-focused tax break, though they say the discussion is still in early stages. 'We really haven't socialized it that much,' Meuser said. 'I just know what the president said, and after assessing the situation, I see his point, and I agree with him.' Sen. John Kennedy (R-La.) said he was thinking it over. 'I haven't made a decision about carried interest,' he told reporters Monday. 'I know the way it works. Frankly, there are good arguments on both sides. If we end up [needing] the money, could I vote to get rid of carried interest? Yeah, I could.' Asked about the tax break, House Ways and Means Committee Chairman Rep. Jason Smith (R-Mo.) told The Hill that the entire U.S. tax code was being reconsidered. 'As the tax teams have been working over the last year in 120 different meetings, we're looking at the entire tax code. Every provision is on the table,' Smith told The Hill Tuesday. Former President Biden floated taxing carried interest as regular income in various legislative proposals, including the 2022 Inflation Reduction Act (IRA) and his fiscal year 2024 budget. Democrats had to remove the carried interest change from the IRA to shore up their party-line vote and get the support of then-Sen. Kyrsten Sinema (Ariz.), a wild card for Democrats during the previous Congress. 'I believe strongly in [closing] the carried interest loophole. I have voted for it. I pushed for it, I pushed for it to be in this bill. Sen. Sinema said she would not vote for the bill, not even move to proceed, unless we took it out. So we have no choice,' Sen. Chuck Schumer (D-N.Y.), then the Senate majority leader, said in 2022.
