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The Warren Bill

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The Warren Bill will Destroy Jobs, Hurt Small Businesses, Threaten Retirements

This bill should be renamed the Stop Main Street Investment Act – because that’s what it would do.

Senator Elizabeth Warren’s anti-private equity legislation would destroy jobs on Main Streets across America, discourage economic growth in local communities, undermine Build Back Better priorities, and threaten retirements.

“This bill should be renamed the Stop Main Street Investment Act – because that’s what it would do. As families and local economies across the country continue to struggle, Senator Warren’s irresponsible bill would discourage small business investment, destroy jobs, hurt retirements, and threaten investments in important fields including sustainability and life sciences.

“We encourage Senator Warren to consider how private equity is helping her own local community. In her home state of Massachusetts, the private equity industry directly supports over 307,000 jobs, invests in over 545 companies, and recently delivered FY 2021 returns of over 72% to strengthen public servants’ pensions.

“It’s concerning that Senator Warren continues to vilify an industry that directly benefits so many of her constituents and their families. Private equity has a strong record of investing successfully across America, creating jobs, supporting climate and life sciences research, and strengthening retirements for hard working public servants.”

AIC President and CEO Drew Maloney


During 2020 and throughout the global COVID-19 pandemic, the private equity industry invested in every state across America and these investments were overwhelmingly successful. According to a recent report from the American Investment Council prepared by Ernst & Young LLP (EY US), the private equity industry and private equity backed companies:

  • Directly employed more than 11.7 million workers in the United States in 2020 – and over 307,000 workers in Massachusetts.
  • Generated $1.4 trillion of gross domestic product (GDP), or approximately 6.5% of total GDP
  • Paid $218 billion in federal, state and local taxes last year.
  • Invested heavily in small businesses – of all the businesses receiving private equity investment, 86% employed 500 or fewer workers. Roughly a third employed just 10 workers or less. These small businesses represent the backbone of the American economy, and their strength will be critical to a sustained recovery.

The American Investment Council’s 2021 Public Pension Study shows that  private equity continues to be the best returning asset class in public pension portfolios. In 2020, private equity continued to provide a strong return on investment, with a median annualized return of 12.3 percent over a 10-year period.  The Massachusetts Pension Reserves Investment Trust which had a 10-year annualized return from private equity of 15.03 percent as of June 30, 2020, net of fees. For FY 2021, private equity generated gross returns of over 72.2% for Mass PRIM.


  • Impose new legal liabilities on private equity that do not exist for shareholders elsewhere in the economy. The excessive liabilities would make it next to impossible for investors to invest in struggling businesses that need capital.
  • Subject private equity investments to a series of punitive tax increases that would harm investors like pension funds and the companies private equity invests in. It:
    • Destroys the tax code’s incentive for long-term investment and growth by eliminating carried interest capital gains.
    • Imposes an investment-killing restriction on the deductibility of interest.
    • Imposes a 100% tax on fees received from portfolio companies.
  • Impose duplicative and excessive regulations. For example, private equity firms are already highly regulated under the Investment Advisers Act of 1940 and other laws. Warren attempts to impose requirements that already exist in law, such as a fiduciary duty on private equity advisers.
  • Make it more difficult for private equity funds to generate strong returns for pensions plans, university endowments, charitable foundations and other investors.


In November 2019, the United States Chamber of Commerce released a study that explored the economic contributions of the private funds industry and the impact Senator Warren’s bill would have on jobs, retirements, and the U.S. economy.  The study found that the Warren bill:

  • would result in a loss in the range of 6.9 million to 26.3 million jobs across the United States;
  • would result in combined Federal, state, and local governments losing a combined $109 billion annually in tax revenues (revenues used to fund other programs) in a modest case scenario, or $475 billion in a worst-case scenario;
  • investors could lose anywhere from $671 million to $3.36 billion per year (about half of which would be lost to pension fund retirees);
  • imposition of increased risk, taxes, and restrictions contained in S.2155/H.R. 3848 would likely cause some (and potentially all) of the private equity industry to cease to exist;
  • many firms which normally seek PE financing would be unable to find financing and fail (or downsize);
  • if even 1% of the industry exited, and an equivalent percent of PE portfolio companies failed, the Federal governments would lose money.