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Tuesday, December 18, 2007

RNC Research Dept.: Clinton’s High-Tax Platform Missing “Magic”

Sen. Hillary Clinton’s Plan To Raise Taxes On Private Equity And Hedge Funds At Odds With Campaign Supporter “Magic” Johnson

Former NBA Star “Magic” Johnson Campaigns For Sen. Clinton In Iowa, Despite His Opposing Views On Carried Interest Taxation:

Former NBA Star “Magic” Johnson Joins Former President Bill Clinton To Campaign For Sen. Clinton In Iowa. “Former President Bill Clinton and retired basketball star Earvin ‘Magic’ Johnson will be in Davenport on Tuesday to campaign for Hillary Clinton. The ex-president has been a regular on the campaign trail, but this will be the first time that Johnson, who played for years for the Los Angeles Lakers, will have hit the hustings in Iowa for U.S. Sen. Clinton. The two men will be at Davenport Central High School for a 10:30 a.m. event, according to the Clinton campaign. Clinton and Johnson are making stops in Davenport and Waterloo.” (Ed Tibbetts, “Bill Clinton Coming To Davenport On Tuesday,” Quad-City Times, 12/17/07)
“Magic” Johnson Is A Leading Member Of The Access To Capital Coalition, Which Opposes The Carried Interest Tax Hike:

“Magic” Johnson Is One Of The Leading Members Of The ACC. “Former basketball player Earvin ‘Magic’ Johnson has emerged as one of the most unlikely players in the increasingly heated debate on whether to raise taxes for the US private equity industry. Mr Johnson … is a leading member of the Access to Capital Coalition, a new grouping made up of minority and women business leaders.” (James Quinn, “’Magic’ Throws Tax Opinions Into Ring,” Telegraph [UK], 7/9/07)

“The Former NBA Star [Magic Johnson], Now A Successful Entrepreneur…Argues That New Tax Legislation Would Lead To Less Investment In Areas That Struggle To Get Funding.” (James Quinn, “’Magic’ Throws Tax Opinions Into Ring,” Telegraph [UK], 7/9/07)

The Access To Capital Coalition Is A National Coalition Of Small, Minority And Women-Owned And Managed Businesses, Formed Solely “To Oppose Efforts To Eliminate The Capital Gains Treatment Of Carried Interest.” “The Access to Capital Coalition (ACC) is a national coalition of small, minority and women businesses in the private investment industries and entrepreneurial sectors. The coalition was formed to oppose efforts to eliminate the capital gains treatment of carried interest.” (Access To Capital Coalition Website, , Accessed 11/29/07)

Some Of The ACC’s “Specific Concerns Regarding Carried Interest Taxation And The Proposed Legislation” Include:

“Due to reduced profitability and an increase in transaction costs, the proposed legislation would have a particularly adverse financial impact on small and midsize firms—the sizes of most minority and women businesses.” (Access To Capital Coalition Website, , Accessed 11/29/07)

“In eliminating the capital gains treatment of carried interest, the proposed legislation would be removing one of the key incentives for minorities and women to enter the private investment business as owners, partners and managers. This is due in large part to the fact that the current treatment of carried interest allows individuals to gain equity interest without possessing vast financial resources, as they are able to use their skills and expertise to make companies profitable.” (Access To Capital Coalition Website, , Accessed 11/29/07)

“An alteration of the current tax policy has the potential to significantly add to the number one burden of minority and women private investment companies–the ability to gain and maintain quality access to capital.” (Access To Capital Coalition Website, , Accessed 11/29/07)

Despite Johnson’s And The ACC’s Opposition, Sen. Clinton Would Raise Carried Interest Tax Rates:

Sen. Clinton Has Called For Higher Taxes On Carried Interest, Which Is Paid To Private Equity And Hedge Fund Managers. “Congressional Democrats have zeroed in on private equity taxation in their search for new revenue sources … Carried interest is currently subject to the capital gains rate of 15%, but the proposed change would treat it as income subject to the marginal rate of as much as 35%. … Following her top Democratic rivals in the presidential campaign, Senator Clinton has come out in favor of the tax hike.” (Russell Berman, “Rangel's Priority Is Repealing The AMT,” The New York Sun, 9/7/07)
Sen. Clinton: “As President I will reform our tax code to ensure that the carried interest earned by some multi-millionaire Wall Street managers is recognized for what it is: ordinary income that should be taxed at ordinary income tax rates.” (Hillary Clinton For President, “Hillary Clinton Proposes Ending Unfair Tax Breaks For Wall Street Investment Managers,” Press Release, 7/13/07)

Danny Diaz
Republican National Committee (RNC)

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