American Private Equity: A Cow to Milk or Butcher

Townhall.com ^ | August 16, 2007 | Ken Blackwell

[gpapa]

For every action there is an equal and opposite reaction.” - Sir Isaac Newton

A general good rule of thumb is to expect that someone will be soaked whenever Congress starts talking about making the tax code fairer. Another good rule is if you want less of something, tax it. Such is the case with a proposed adjustment to an established tax rule with far reaching implications for the American economy.

Always hungry for more money to spend on pet projects, spendthrift members of Congress have found new taxable cash cows to fillet — private equity funds, partnerships, venture capitalists, and hedge funds. Foolishly, they have opted to fillet these cows for a month’s worth of steak instead of milking them for economic nutrition for years.

Specifically, the members of Congress have placed a 130% tax increase bullseye squarely on the backs of fund managers. These are hyper-aggressive and competitive financial managers who work hard, take risks, drive innovation, and earn tens of millions of dollars on a single completed deal.