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Originally Posted by lustylad
I'm not surprised, and it points to Hildebeest's utter hypocrisy at a time when she is now being attacked by Bernie's socialist dupes for not sufficiently hating Wall Street... the irony is that carried interest is one area where one could objectively challenge the tax code. It allows hedge funds and private equity firms to treat their “2 + 20” fees as capital gains. Since these fees are compensation for the work of running the investment vehicles rather than money that the hedge funds/PE firms put at risk along with their clients, there is a logical case to be made for treating “carried interest” (or at least part of it) as ordinary (and taxable) income. Do you agree? What are the arguments for cap gain treatment?
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The argument for taxing carried interest at cap gains rates essentially boils down to the claim that it incentivizes capital formation, since an even greater after-tax reward would flow to the venture's manager at the end of the day. However, even though I have personally benefited from the provision, I have a bit of trouble with that one. The way I see it, if I do not have
my own capital at risk, it's a whole different ball game, and the "carried interest" return does not in essence differ from any other commission or performance fee. In short, I fail to see how taxing carried interest at ordinary income rates does much of anything to impede capital formation. (But, hey, if the code offers something, I'll take it!)
Quote:
Originally Posted by lustylad
IUnfortunately I don't share your optimism that this kind of cram-down of new tax rules can't work. It'll take years to challenge the new rules in Tax Court, and the outcome is uncertain. In the meantime, corporations have to figure out how to fund their foreign subs in ways that minimize their overall taxes while complying with Jackass Lew's arbitrary rules... the bastards employ the same tactics in other areas too. For instance, the EPA keeps issuing new regs forcing power companies to install expensive new equipment to (marginally) reduce certain emissions – by the time the Courts get around to ruling that the EPA exceeded its authority and/or didn't perform a proper cost/benefit analysis, it's a fait accompli because billions have already been spent to comply... this is the Odumbo REGULATORY STATE in action, determined to impose its agenda on the country at all costs, forcing everything through before the courts can reverse it!
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Well, here I think an interpretation of my statement would depend on what the definition of "work" is!
What I meant, in essence, is that I don't think Lew's marching orders will work well with respect to effectively addressing the issue without risking certain adverse and non-trivial consequences for the economy.
But from Obama's point of view, they are likely to "work" very well, since he will be able to come away smug and satisfied that he has been able to impose his will on a swath of corporate America!
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