Posted on 09/07/2015 7:15:07 AM PDT by expat_panama
...Taxing carried interest as ordinary income is a really dumb idea. The title is just being polite.
It makes no sense as a matter of tax policy. It makes no sense if your goal is to soak the rich. It makes no sense if you want to raise money for tax reform. It is the triumph of feelings over thinking, and emotion over reason. It is borne of impassioned ignorance combined with a singular stupidity. It’s populism at its worst and ugliest.
[snip] How does this expert investor get compensated? Usually by something called “two and twenty.”
The “two” stands for the management fee/W-2 salary the investor gets for his labor–his paychecks equal two percent of the assets he is managing. Like any other wage, it’s subject to ordinary income tax and payroll taxes.
The “twenty” stands for the expert investor’s share of the capital gain he obtains for the limited partners. He keeps twenty percent of the capital gains he accrues (above and beyond the original investment), and the remaining eighty percent is left for the limited partner investors–those colleges, charities, and pensions mentioned earlier.
The investor expert’s share of the capital gain is known in the industry as his “carry.” Like any other capital gain, it’s subject to capital gains tax.
[snip]
Taxing Carried Interest As Ordinary Income Is Bad Tax Policy
[snip]
Taxing Carried Interest As Ordinary Income Won’t Raise Money for Tax Reform
[snip]
A Bad Idea Whose Time Has Not Come
Raising capital gains taxes is a bad idea. Doing so because you don’t like the recipients of a certain type of capital gain is a worse one. Donald Trump and the other Republicans running for president should think twice before pandering to this hard Left demagoguery talking point.
(Excerpt) Read more at forbes.com ...
“Taxing some one because you don’t like them is an ignorant way to determine policy. This is the biggest problem I have with Trump, the legacy of attitude he foments in his followers.”
Do you have a better way of getting their attention? That is the only conservative value they care about. The left knows that the capitalist will sell the rope to his own hanging.” top quote Lenin. Besides why shouldn’t the people who are helping the Democrats tear this country apart be made to pay for the mess they are making. Remember the elite medias response that the country clubbers are, “working wit the de ms to get things done”. What are they getting done? Nothing they want to tell us about!
Questions: What and Who are these “expert” investors? Never met one. Do you know any? Is he talking about us here on FR? I don't get that 2%!!!! ; )
Humor Aside
IMHO, Trump should go after those so called “foundations” that the rich hide behind to protect their BILLIONS/100s of Millions. Rahm Emanuale’s private house is a Foundation. Don't ask me how that helps him financially, but it obliviously does. The super wealthy like Spielberg have these absolutely fabulous mega yachts in Fort Lauderdale. I don't mind that but then don't be a limousine liberal. That lights a fuse in me. They all have these foundations, are on each others boards giving each other these salaries......
That needs to be taxed to high heaven. Something like - Any foundation that is not giving 95% of its gross revenues to a charity will be taxed at 50%? Whatever makes sense. I doubt that, if you summed up all the potential revenues they wouldn't add up to a hill of beans. (Love Casablanca-great movie-have not seen it in a while)
WTHeck were they thinking??????
Let me repeat:
However, in the hedge fund case, the fund manager doesn’t own the stock and is not exposed to risk of loss on the underlying asset value.
It’s wrong tax policy to transform a performance bonus into capital gains where there is no risk of loss. Hence, I believe Trump is correct to go after this anomaly.
I’m not able to debate intelligently about complex taxes on the hedge fund guys, but I don’t know why Trump doesn’t go after OUR OWN excessive corporate tax rates and outrageous business regulations FIRST. He scares me when he talks about tax hikes for the “super-rich”...he takes words right out of Obama’s mouth.
I think Trump’s instinct is to do good. Out of apparent ignorance, he thinks government is the vehicle to do it. The problem is that’s how liberals always get started. One thing leads to another, and before you know it, here we are.
There will never, ever, EVER be enough of our money to satisfy the tapeworm of government.
Trump says he reads a lot. I wonder if he’s read Milton Friedman.
Yes, but we’re going to punish those evil rich people for presuming to make more money than we, the noble and compassionate ones, make. Just who do they think they are?
Yes, he does seem to have an affinity for tax increases.
Now, if you wanted to raise a particular tax and lower several others, lowering the overall burden, there might be an argument there, depending on the particular taxes involved. But that doesn’t seem to be what The Donald is arguing for.
There are multiple links on the thread linked below where Cruz explains his Corker vote. Plus, see my response. In the end, it really only matters who gets the White House, because no one will stop the Iran train right now. No one.
http://www.freerepublic.com/focus/news/3333485/posts?page=45#45
I’ll take four Scalias, thank you.
I agree. Trump is right.
Why should the mere act of re-naming a “performance bonus” as “a carried interest” cut the taxes due on that bonus by more than 50%?
Why should clever (wink-wink) Wall-Streeters be allowed to accelerate the building of their fortunes by using a WORD to evade “ordinary” income taxes?
Yes this is not a new argument its been going on for awhile.
If you start a business you put your own money into it and its a risk that you take. So you deserve to pay less tax on the profits.
The Hedge Fund guys don’t fall into this category IMO. So Trump has a valid argument.
ALL income taxes are an affront to the 13th Amendment’s prohibition of involuntary servitude, IMO. If the definition of slavery is a tax rate of 100%, then any lesser percentage is merely a matter of degree.
Horse Shit!
Income is income. There is no reason to treat unearned income in any manner different than earned income. Lower all rates to one reasonable rate and everyone is treated fairly regardless of how they earn a living. Taxing earned income at higher rates is a slap in the face to people who are not wealthy to begin with.
The problem is that we tax what we want to increase. We want more investment, more savings and more work but tax those things. We should really tax other activities like spending and imports on finished goods.
A tariff based tax system coupled with a national sales tax would be the most fair form of taxation, but implementing it would require moral courage. Something most politicians lack.
Not taxing someone just because they give big donations is evil.That is what I hate about our corrupt aristocracy.
Why should hedge fund guys be taxed at only 15%? Chris Dodd was their patron saint and got this for them. This Connecticut Senator took care of his hedgies. Ground zero for hedge funds is Westport Connecticut.
Hedgies are skimmers and useless eaters but they should at least be paying the same cap gains as everybody else.
***** I would love to see Chris Dodd’s net worth these days. It will reflect all the favors (via legislation) he did for the hedgies and I believe he lobbies for them these days
Some other words used to build wealth.
Charitable organization. Charitable trust.
Non profit.
Activism.
We should be arguing to reduce taxes on labor the largest of which is welfare, followed closely by local licensing, permitting and zoning ordinances that punish entrepreneurship and innovation.
Sure, I love a good name-calling foodfight as much as the next guy but I also like to once and a while go back to work and earn a living. Fund managers earn a living. Mindless name-calling pundits don't, and we daren't expose ourselves to that kind of toxic poison too much.
No matter what people say, hedge funds aren't funds and they don't hedge. Kind of like Grapenuts isn't grapes and isn't nuts.
“Income” taxes should be more properly named “labor” taxes. Because that’s what it is - a tax on labor.
Ah. You hate all hedge funders, the decision is final, so there's no point in ever finding out who they are or what they do. Good to be clear on this.
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