Dan Primack had a dismaying, if unsurprising, discovery Monday when speaking with Rep. Sandy Levin (D-MI) about his sponsorship of a bill that would cause carried interest at VC and PE firms to be taxed as ordinary income.
I asked Levin to respond to the most persuasive counter-argument
against his bill – the one about how carried interest should be treated
like founders’ equity (i.e., as capital gains). But Levin didn’t have
an answer. Even worse, he did not seem to understand the question –
even though I repeated it using varying language no less than four
times. At one point, his spokeswoman had to break in and try to explain
it to him.
Ouch.
[via PE Hub]]
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I suspect all the blather that dividends shouldn’t be taxed because it would “taxing twice”, or that stock options are some sort of mystical token of affection that do not have a value, has rather poinsoned the well for that sort of questioning.
He might be completely unfamiliar with the question topic – or he might have decided going into defensive mode was a better idea than trying to have an off-the-cuff accounting discussion.
I respectfully disagree, Seth. DC is largely populated by idiots, scumbags, or a combination there of. I believe the old joke, “D stands for Dumb-ass and R stands for retarded”, is entirely too kind.
I’d like to hear a clear explanation of why investment income earned by the relatively wealthy should be taxed at 1/2 the rate of labor income earned by normal workers. Its pretty obscene to say that a VC should pay 15% tax on guaranteed income from his fund while a working mother making $50K while supporting 2 kids should pay twice that rate.
Surely you’re not suggesting that VCs and other investors will stop trying to make money if they have to pay the same rate of taxation that working suckers do?
Maybe Levin is an idiot (not sure). But lets not pretend there aren’t solid reasons why VCs and private equity at least should get such a break relative to normal employees.
Maybe Mr. Levin couldn’t respond because the “most persuasive counter-argument” made him want to vomit.