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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  1. identicon
    Anonymous Coward, Jul 13th, 2007 @ 4:36pm

    Come on

    People that make 50 mil a year should not be taxed at 15%. They should pay 35% like all short term capital gains. They are just closing a loophole in my opinion.

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, Jul 13th, 2007 @ 4:43pm

    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.

    reply to this | link to this | view in thread ]

  3. identicon
    SL, Jul 13th, 2007 @ 4:52pm

    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.

    reply to this | link to this | view in thread ]

  4. identicon
    Shalkar, Jul 13th, 2007 @ 6:43pm

    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...

    reply to this | link to this | view in thread ]

  5. identicon
    Bob Knight, Jul 13th, 2007 @ 6:51pm


    reply to this | link to this | view in thread ]

  6. identicon
    Bob Knight, Jul 13th, 2007 @ 6:54pm


    Tax rate should be 10% up to 100K a year.
    Over 100K a year 15 percent.
    No death tax, no capital gains, no anything else tax.
    No deductions except for kids.

    reply to this | link to this | view in thread ]

  7. identicon
    free America, Jul 13th, 2007 @ 7:47pm

    Re: My Opinion is:

    Please get out of our country.


    There are so many things wrong with everything you said, it's astounding.

    reply to this | link to this | view in thread ]

  8. identicon
    my2cents, Jul 13th, 2007 @ 9:25pm

    Re: My Opinion is:

    Where's your incentive to do well, achive, suceed? Socialism dosent work, ask the Russians.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, Jul 14th, 2007 @ 1:29am

    Re: Re: My Opinion is:

    or the Canadians

    reply to this | link to this | view in thread ]

  10. identicon
    the irs, Jul 14th, 2007 @ 8:38am

    the IRS doesn't have the right to tax anyones labo

    The IRS has been stealing the money of the American people long enough. There is no law that says they can tax anyone other then Corperations and people outside the 50 states, like the people in the American teritorys.

    reply to this | link to this | view in thread ]

  11. identicon
    KN, Jul 14th, 2007 @ 8:56am

    I completely agree with SL

    It's a loophole. Closing the loophole is fair.

    reply to this | link to this | view in thread ]

  12. identicon
    Mike, Jul 14th, 2007 @ 9:29am

    Re: I completely agree with SL

    It is not closing a loophole; rather, this is a blatent tax increase (AKA: stealing more money from the enslaved suckers).

    reply to this | link to this | view in thread ]

  13. identicon
    Kerr, Jul 14th, 2007 @ 10:26am

    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.

    reply to this | link to this | view in thread ]

  14. identicon
    Anonymous Coward, Jul 15th, 2007 @ 8:52pm

    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.

    reply to this | link to this | view in thread ]

  15. identicon
    Celes, Jul 16th, 2007 @ 5:14am

    Re: the IRS doesn't have the right to tax anyones

    Wow. I can't even begin to tell you how many things are wrong with that. Why on earth would you think that's so?

    reply to this | link to this | view in thread ]

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