From the Morning Memo:
As Democratic presidential candidates discuss potential taxes that could take a major bite out of private equity, the industry is defending its role in the state’s economy.
Ernst & Young on Monday is set to released a report, paid for by the American Investment Council, that touts the role private equity plays in job creation nationally and in the state.
The report points to the direct employment of 609,000 people in New York alone, with a combined state and local tax generation of $6.1 billion. At the same time, the report notes private equity leads to related consumer spending that supports 10.4 million workers across the county.
The report comes as Sen. Elizabeth Warren has proposed new regulations for the industry when private equity investment firms have to resort to plan B — stripping a company of assets and laying off workers. Her plan, in essence, would make private equity firms responsible for all debts and obligations of the companies they buy.
But the industry warns such a move would stifle investment.
The report paints a picture of private equity that has more direct involvement in the state’s economy, including how the state pension fund has an in-state private equity investment program, which has led to a $863 million return on $583 million invested.