Thursday, May 27, 2010

Australia Stuggles with Bloody PEU Games

While private equity legends lobby the U.S. Congress to maintain their preferred tax status on carried interest, a similar struggle occurs Down Under. Private equity underwriters (PEU's) want "tax predictability," code words for the lowest taxes possible.

Their tools include loading up affiliates with debt, which raises interest expense dramatically. PEU's siphon cash from affiliates via management fees and special dividends. They use transfer pricing to move untaxed dollars throughout their global clutches.

The question is how infected are Australian politicians? America's Red and Blue Corporacrats have done private equity's bidding three times on carried interest. Will there be a fourth?

Has Tony "I'll sell my soul for pounds" Blair signed on with any Aussie firms? Disguise his war crime indictment as a check and justice might be served.