Washington-based private equity firm The Carlyle Group has come under attack from the Service Employees International Union over its pending $6.3 billion acquisition of Manor Care, Inc., a network of more than 500 health care service providers, including nursing, rehabilitation centers and assisted living facilities.
The SEIU, which represents an estimated 1,000 workers at 20 Manor Care properties in six states, is criticizing the buyout deal because it says Manor Care will not pay any corporate tax during the life of the buyout. SEIU spokesman Andrew McDonald said after doing analysis “using pretty conservative assumptions,” his organization concluded that over five years, $600 million in federal, state and local taxes will be forgone. The SEIU plans to investigate the impacts of buyouts on the state level with governors and other union leaders.
In addition, the SEIU announced it will examine the federal contracts of portfolio companies within The Carlyle Group, because, McDonald said, “A lot of the money [portfolio company executives] get is from companies that get federal taxpayer dollars, and then don’t pay taxes back.”
The Washington-based Private Equity Council, an advocacy and communications organization which The Carlyle Group is a member of, released a statement in response to the charges: “Private equity firms are taxed in the same manner and at the same rate as any investor that buys a company, a building or another asset, grows its value over time, and sells it at a profit. Portfolio companies owned by private equity firms pay corporate taxes, payroll taxes, health insurance taxes and real estate taxes, just like any other company.”
The Carlyle Group declined to comment on any of these items.
