Dorsey partner Mario Diaz Cruz was interviewed at the New York Stock Exchange on June 27 by Globoeconomica, a global financial news program that appears on CNN en Español in the United States, Latin America and Spain. Diaz Cruz discussed the current debate in Congress on whether to change the tax treatment of the allocation of profits (or carried interest) to private equity managers.
According to Diaz Cruz, private equity funds have traditionally been formed as limited partnerships or, more recently, as limited liability companies which are taxed as partnerships. Fund managers usually receive a percentage – often 20 percent – of any profit realized from the sale of companies acquired previously by the fund. These earnings, known as carried interest, are taxed as a capital gain (a 15 percent tax rate). Diaz Cruz said that in recent months, lawmakers and labor groups have increasingly questioned whether these profits should instead be taxed at the 35 percent income tax rate.
The Globoeconomica interview with Dorsey partner Mario Diaz Cruz was aired by CNN en Español, June 27, 2007.