Private equity executives are largely pleased with the tax bill, but there are growing grumbles about how the change to interest deductibility isn't grandfathered in for existing loans.

  • Primer: Under current tax law, corporations can deduct 100% of interest on their debt. The new bill limits that deduction, and further strengthens the limit after four years.

Bottom line: This could be a particularly acute problem for highly-leveraged companies that are either unprofitable or barely profitable. In those cases, private equity sponsors may have to choose between pumping in new cash and crossing their fingers.

Additional notes:

  • Going forward, expect leverage levels to decrease. Per one buyout big: "We use leverage as a tax shield, which is about to become much less relevant."
  • There is likely to be a decline in dividend recaps, at least in the short-term.
  • To be clear, private equity firms are still cheering these changes (at least from a portfolio perspective).
  • The longer-term hold period to qualify for carried interest is unlikely to prevent firms from selling before three years, in the rare cases when applicable. Just expect the funds to essentially defer the carry.
  • Go deeper: What you'll see under the new tax code.

Go deeper

President Trump's suburbs

Photo illustration: Annelise Capossela/Axios. Photo: Tom Williams/CQ Roll Call.

President Trump cast an outdated vision of "the 'suburban housewife'" as he swiped this week at Joe Biden's newly minted running mate Kamala Harris — building on his months-long play to drive a wedge through battleground-state suburbs by reframing white voters' expectations.

The big picture: As he struggles to find an attack that will stick against the Biden campaign, Trump for a while now has been stoking fears of lawless cities and an end to what he's called the “Suburban Lifestyle Dream.” It’s a playbook from the ‘70s and ‘80s — but the suburbs have changed a lot since then.

Trump tightens screws on ByteDance to sell Tiktok

Illustration: Aïda Amer/Axios

President Trump added more pressure Friday night on China-based TikTok parent ByteDance to exit the U.S., ordering it to divest all assets related to the U.S. operation of TikTok within 90 days.

Between the lines: The order means ByteDance must be wholly disentangled from TikTok in the U.S. by November. Trump had previously ordered TikTok banned if ByteDance hadn't struck a deal within 45 days. The new order likely means ByteDance has just another 45 days after that to fully close the deal, one White House source told Axios.

Updated 10 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 9:30 p.m. ET: 21,056,850 — Total deaths: 762,293— Total recoveries: 13,100,902Map.
  2. U.S.: Total confirmed cases as of 9:30 p.m ET: 5,306,215 — Total deaths: 168,334 — Total recoveries: 1,796,309 — Total tests: 65,676,624Map.
  3. Health: CDC: Survivors of COVID-19 have up to three months of immunity Fauci believes normalcy will return by "the end of 2021" with vaccine — The pandemic's toll on mental health — FDA releases first-ever list of medical supplies in shortage.
  4. States: California passes 600,000 confirmed coronavirus cases.
  5. Cities: Coronavirus pandemic dims NYC's annual 9/11 Tribute in Light.
  6. Business: How small businesses got stiffed — Unemployment starts moving in the right direction.
  7. Politics: Biden signals fall strategy with new ads.