Fears Of New Taxes On VCs May Be Overblown

from the the-power-to-tax-is-the-power-to-destroy dept

The VC community has expressed concern that changes to the tax code, intended to hit private equity firms, will end up hurting them as well. Given the explosion in alternative investment vehicles and the large sums that these companies have been raking in, politicians have been keen to make sure that they’re all paying their “fair share”, whatever that means. But perhaps the issue is being overblown on all sides. According to one estimate, the change would only bring the government an additional $2 billion in annual tax revenue. From the perspective of industry and government, that’s really a mere pittance. Of course, it should make one wonder why Congress is spending so much time debating this issue. If it’s not about raising revenue, and only about going after a successful, high-profile segment of the economy, then the push would mainly seem to be about politics.

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Comments on “Fears Of New Taxes On VCs May Be Overblown”

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Anonymous Coward says:

As the late Republican Senator Dirksen from Illinois once said, “A billion here, a billion there – pretty soon you’re talking about real money.”

Seriously though, the amount of money involved has nothing to do with fairness. It’s fair or it’s not.

Too ascribe Congress’s interest in this as mere politics is just wrong, and smells like a smokescreen. In fact, it sounds very much as though you have a (VC) dog in this race, Joe. Or at least a sympathy in that direction.

It’s fair or not – period.

SL says:

not politics

It is about closing a nasty loophole that allows hedge fund managers to recharacterize income as capital gains. VCs are not the target, as you clearly pointed out, and that can be worked out in committee.

Painting this proposal as about “going after” someone overlooks that the intended targets are engaging in quasi-legal book cooking: paying a tax rate intended for those who take RISKS in INVESTING their own money when in fact the targets are merely the folks gambling on the markets with someone else’s money. In fact this is as close to free money as the government can get because increasing this tax should not have an impact on private equity investment.

Because the exploitation of this loophole has grown so quickly, it warrants attention. Linking to WSJ editorials calling $2 billion dollars pocket change is disingenuous as it projects the gap over the last 11 years as a means of projection which ignores that growth trend.

Secondly, $2b is an enormous sum of money. Has our federal debt begun to feel your arm? Contrary to what the Heritage Foundation says, we can’t tax-cut our way to a balanced budget so maybe we should try making smart responsible steps to addressing it.

Shalkar says:

My Opinion is:

I think they should redo the taxes. Period. I think $10,000.00 and under shouldn’t be taxed at all. If you earn that much and that’s all, you’re probalby barely getting by. Every $10,000 after that is taxed at an additional 5%. So $10,000.01 – $20,000.00 should be taxed 5%. $20,000.01 – $30,000.00 would be taxed 10% and etcetera. Yes this means it would basically just put a cap on how much you can earn before you were giving it to the government, but that’s kind of the point.

People are too greedy. IF you don’t stop them, nobody will. Right now a minority of the people have a majority of the money. That is totally wrong. If the government taxed like I just said, not only would that problem be fixed, overall we’d have more money for the government to get things done. Which, I think ANY money a person gets should be taxed. Even if you whore for a living. I don’t care. That’s only with my way of taxing though. Not this currently broken system.

Also, I don’t CARE if somebody in the neighboring state makes more than you for the same job. Take their living expenses in to account. For instance, I live in West Virginia. This god forsaken state is an utter mess. The teachers keep saying, “We want paid the same as the neighboring states!”. Well, move there then. We have ALOT of teachers going to those other states because there are currently alot of teachers who CAN retire right now, but refuse to because it would be a cut in how much they get.

Nevermind they’re the highest paid state workers in West Virginia. You know how much my grandmother makes as a social worker? She gets paid barely over $9.00/hour after TWENTY EIGHT YEARS! They didn’t offer a social worker degree when she started. Heck, not she could have afforded it way back then… So EXCUSE ME if I hate the teachers and their pathetic bickering. IF you don’t like something, change it or get the hell out.

Sorry about that tangent, but that’s the first thing that came to mind when I thought about people complaining about how much money they get…

Kerr says:

All capital gains taxes are 15%. This means whether you own a stock or a house, and own it for over a year, you pay 15% of the PROFIT you made to the government.

That is a law, it is unchanged for anyone. It becomes a problem if you make a VC pay more on capital gains taxes because then it becomes special treatment. That is illegal by the 14th amendment.

Come on people, keep your stupid thoughts to yourselves.

Anonymous Coward says:

There is tax on the property to make or grow or mine the product.
there is tax on the energy to utilize or create the product.
there is tax on the energy to ship the product
there is tax on the employment of the workers
there is tax on the workers themselves
there is tax on consuming the product
10% that is a laugh
fair would be a 25% flat tax on income /profit no exceptions no deductions and yes I have children
loose the property, sales, phone, gas, and all the garbage taxes 15% to the states 10% to federal end of story.

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