Federal tax reform as proposed would not help private equity investment and could be a slight drag to the business, said Blackstone Group LP Chairman and CEO Stephen Schwarzman.
One proposal would eliminate tax deductions, which would weigh on earnings investment, Schwarzman said during a conference presentation. The balance of benefits versus disadvantages would probably break even for partners.
"I don't know that [tax reform] changes the investment proposition," he said.
In an interview with CNBC the same day, Schwarzman praised the tax changes circulating on Capitol Hill, calling the proposed reform a "game changer" for the scale of its impact. However, the elimination of interest deductibility would be slightly negative for private equity companies, which regularly finance buyouts, he told the news outlet.
Blackstone recently began an infrastructure investment fund, and Schwarzman thinks an infrastructure push will likely be the next major congressional initiative after tax reform. He thinks the country would do well to use a public-private partnership model in which companies buy cash-generating infrastructure and the federal government supplements asset sales as long as the money is used to develop the infrastructure.
"This is what Australia does. [It's] hugely successful, and they have great infrastructure," he said.
Infrastructure is the only policy area in Washington in which Republicans and Democrats have much the same goals, even if they have different ideas for financing them, he added.
