Policy Agenda

Public Policy Priorities

ACG’s Public Policy Agenda for the 115th Congress helps fulfill the organization’s mandate to advocate for legislative and regulatory policies that advance the health and growth of the middle market and ACG members.

ACG promotes public policies that foster and incentivize the formation of private capital, investment and job growth for the middle market.

Tax

There are approximately 200,000 middle market companies—those with revenues between $10 million and $1 billion. Middle-market companies have distinct disadvantages relative to larger or even smaller companies, yet are vital contributors to America’s tax base and are essential to more jobs growth.

The statutory corporate tax rate in the United States is 35 percent, with an average combined (federal and state) rate of 39.1 percent. Global competitors, on the other hand, have a combined average rate of 25 percent, making America’s current corporate rate the second-highest in the world—a significant competitive disadvantage.

  • Advocate for a simpler and fairer tax environment for middle-market businesses and capital providers to attract and incentivize investment and stimulate job creation. ACG supports:
    • Comprehensive tax reforms that:
      •  Preserve interest deductibility on corporate debt.
      • Maintain capital gains treatment of carried interest.

Private Capital

ACG members invest in and operate growing middle-market businesses. Many of these investments are provided by private equity funds. According to Pitchbook, 85 percent of all private equity transactions in 2015 involved companies with less than $500 million in revenue. The investors in these private equity funds are primarily public pension funds, college endowments and other limited partners. These successful private equity investments help support retired teachers, firefighters, police officers and other public employees, as well as scholarships and research grants at colleges and universities.

ACG’s GrowthEconomy.org research found that from 1998 to 2015:

  • U.S. private equity-backed companies grew jobs by 70 percent while all other U.S. companies grew jobs by 24 percent. Well over three-quarters of this growth comes from the middle market;
  • U.S. private equity-backed companies grew sales by 83 percent, while all other companies in the United States grew sales by 25 percent. Nearly 90 percent of this growth comes from the middle market; and
  • Middle-market private equity-backed companies created more than three times the amount of new jobs than any other employment stage.

Regulatory challenges continue to impact the ability of growing midsize private equity firms to focus on deploying capital, growing middle-market businesses and creating jobs.

  • Modify compliance, regulatory and legislative burdens for middle-market private capital providers while maintaining important investor protections, including:
    • Engagement of federal agencies and Congressional committees with oversight of ACG members and capital formation;
    • Modify ill-fitting or duplicative burdens for private capital firms under the Investment Advisers Act of 1940, while maintaining important investor protections; and
    • Advocate for legislation that encourages capital formation for private capital providers and midsize businesses; and
    • Develop industry resources and best practices to ensure regulators and investors understand the importance ACG members place on transparent and compliant practices.

Job Creation

ACG members, their firms, and portfolio investments come in all shapes and sizes. The middle market provides 48 million jobs in America—about 40 percent of the American workforce.

The middle market* is the principal engine of the U.S. economy. According to the National Center for the Middle Market at The Ohio State University, this segment accounts for one-third of private sector GDP and produces more new jobs than large or small businesses. With tens of millions of employees, the vitality of the middle market is critical to the health of American families, communities, and the overall economy.

  • Advocate for policies, legislation and regulations that enable middle-market companies to create and preserve jobs in a changing global economy, including:
    • Provide a middle-market voice to federal agencies and Congressional committees on labor and workforce policies impacting the middle market; and
    • Preserve the current joint employer legal standard for middle-market businesses.

 

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