Budget Reconciliation Tax Measures are “Bad Small Business Policy”

Letter to Congressional leaders expresses deep concern about how tax changes disproportionately harm small businesses and small business investors.

WASHINGTON, D.C. (September 29, 2021) – The Small Business Investor Alliance (SBIA), the association for private equity funds investing in American small businesses, today sent a letter to Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) outlining strong concerns with Sections 138149 (Carried Interest), 138150 (Section 1202 Gains), and 13812 (Prohibition of IRA Investments) in the tax portion of the House-proposed FY22 Budget Reconciliation package. As currently proposed, these tax changes disproportionately harm small business investors and the small businesses they are helping to grow.

“SBIA’s members make long-term, illiquid investments in American small businesses,” said SBIA President Brett Palmer. “Investors provide capital and meaningful management support that help small businesses scale, grow and create jobs to expand prosperity in their communities. If left unchanged, these provisions would restrict and distort investments in the small businesses that create jobs and serve as the engines of America’s economic growth.”

The proposed tax provisions, as drafted, would restrict investments and, in some cases, prevent small business investment in favor of investments in large, publicly traded corporations. Raising capital gains taxes on small business investment would hinder job creation and be detrimental to expanding economic opportunity for all Americans.

SBIA members grow small businesses. They support families. They create retirement security. Their actions directly impact people and communities. It is their contributions to small and medium-sized businesses across this country that create jobs and help drive America’s economy. SBIA members have formed a task force dedicated to sharing this story. The goal of the Capital Gains Task Force, led by industry co-chairs Andrew Panzo of NewSpring Capital and Doug England of The Riverside Company, is to show policymakers the positive impact and need for private, long-term investment in local businesses and communities. SBIA appreciates this opportunity to provide the perspective of our membership and to engage with members of Congress in the ongoing debate over the U.S. tax system. We must all work together to implement policies that encourage long-term investment in small businesses.

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 About the Small Business Investor Alliance (SBIA)

The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing small businesses. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for over 60 years. For more information, visit www.SBIA.org or call (202) 628-5055.

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