For over three years, the private equity industry’s main lobbying group successfully fought against moves to increase taxes on carried interest. Then, Max Baucus and Sander Levin had to go screw it all up yesterday by slipping carried interest legislation into a big tax and spending bill.
That didn’t go unnoticed by the Private Equity Council’s president Doug Lowenstein, who issued a tersely-worded statement yesterday:
“At this time of great market uncertainty, now is not the time to upend more than 50 years of partnership tax law characterizing carried interest as a capital gain,” he said. “This punitive, 157 percent tax hike on growth investment by real estate, venture, private equity and other firms will hurt those companies that are most desperately in need of capital to sustain or create jobs and drive growth.”
According to The Hill, the first 2 years after the legislation is enacted, carried interest will be taxed at ordinary income and capital gains rates — a 50/50 split, which amounts to a tax rate of roughly 30 percent. That split changes to 75/25 after 2 years, which amounts to a 35 percent rate.
The National Venture Capital Association, which has been running ads on Politico, also decried the bill:
“The provision in HR 4213 to tax 75 percent of venture capital carried interest at ordinary income rates and 25 percent at capital gains rates will more than double the taxes that long term investors pay when they build successful companies and create jobs. While this provision is movement away from a pure change to ordinary income, evidencing a House recognition that this type of long term investment is critical to US economic growth, it by no means creates enough of a differential to continue to encourage long term investment in America’s start up companies. We hope that this provision can be amended so that there is a meaningful differential – and a real incentive for venture investors to work with entrepreneurs to continue to build America’s next generation of employers.
The venture industry takes serious issue with the title of this bill for two reasons. First, referring to the carried interest tax structure as a “tax loophole” is untruthful. The capital gains treatment of carried interest has been a legal part of the tax code for decades. Additionally, to characterize this as an “American Jobs “ bill is ironic as doubling the taxes on job creators will result in less jobs, not more, effectively negating any provisions in the bill that will actually support US employment numbers. The venture capital community has continued to create thousands of US jobs each month throughout the recession without any type of government subsidies and plays a critical role in our country’s economic growth and ongoing global competitiveness. This role needs to be supported by Congress.
We urge members of the House of Representatives and those in the Senate working on legislative language of their own, to seriously reconsider the carried interest provision and redraft the language so that a meaningful differential is maintained and long term investment in start up companies is encouraged at a time when America needs jobs the most.”
Kouwe, private equitize my golden scrot.
LB
more taxes and your PE IPO cash outs are trash…..ha, aren’t you glad you nubs supported the Socialist Obama agenda, just send over another paper bag of cash in small bills, obviously the last delivery was not enough for Pelosi…..
@1 give Kouwe a chance, Bess has to take a day off every now and then.
@2 – Dude (Mr. Awesome), fuck off with that already. It was stupid the first time you said it, and it sure isn’t sounding any smarter just because you keep repeating it.
Barney Frank on CNBC, he sounds like he has marbles in his mouth (I wonder who’s they may be)
i suck!
A 3rd grader could find better clip art. Just sayin…
@everyone who voted for this socialist…you get what you pay for…
revisted: Kouwe gets dowwnnnnnnn
http://static.businessinsider.com/image/4a7853789acf173d4bb1df61/zachery-kouwejpg.jpg
where is obama going to put his fat stacks when he is out of office? I would love for that bum to show his face at an investor meeting
@8 learn the definition of a socialist before commenting again you ignorant tool.
@9 is that greg’s mom?
kouwe, you dog…
I felt a great disturbance along Sand Hill Road, as if millions of entrepreneurs suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.
guys, seriously though, please stop making fun of me. you think it’s funny, i think it’s just PLAIN HURTFUL.
Genius @11 – why don’t you help us out by defining it for us, and showing where such characterizations of this awful administration are wrong?
@4 & 11 we all know you love Obama, but he will never walk on water. He effectively shut down small business hiring in this country due to his policies that are raising costs to businesses, when they are operating in a flat to falling revenue environment. Goverment is not the driving force behind private employment growth, though with sound taxing and fiscal policies it may influence it. So far we have not seen any eveidence of this. Extending unemployment benefits multiple times is hardly a policy to encourage job growth.
So to sum it all up in case you missed my point, taxing capital at a higher rate, and raising small business costs results in lower employment. Growing government entitlements are a parasitic disease of Socialist leaning governments.
Of course, government is necessary, but with the ineptness we have seen in past administrations from enforcing our laws from immigration to creating the clusterf#cks Fannie and Freddie I rather see less government.
Obama = more government. ‘kay, you got it now?
I hear private equity partners eat babies and drink their tears. Confirm or deny?
@17 they also suck their breathe from their lungs
@3 shut up Pooey
And the point of this post is . . . ?
Whether you hate Obama or not, I really wish you would stop using words that you don’t know the meaning of. It’s embarrassing.
http://www.politicalcompass.org/images/usprimaries_2008.png
As far as “big government” goes, you are correct. However, it’s not like the situation changes with the republicans—you do realize military spending is part of the federal government, right? Every time one of you blabs about how democrats are big government and republicans are small government you end up looking like a complete idiot. Follow the money, genius.
@16: WRONG.
Per Mark Zandi, a McCain Presidential Campaign advisor, Unemployment benefits have the 2nd highest Keynesian multiplier. Only after Food stamps.
Every $1 in UI benefits leads to $1.68 in near term GDP. Increases in GDP encourages job growth, right?
Examine your motives,
Not a socialist/Obama voter
@20. Advertising income.
@21 = socialist
Your right-wing agendas of spend spend spend on WAR and OIL protection while giving tax cuts ON DEFICIT is so hypocritical of you it’s hilarious. Fuck you
You are aware right that we have 6 trillion debt right mostly derived from Bushe’s insane policies…How do you suppose we pay for that now? Sell Kouwe’s ass on Castro Street? You guys are acting like mother fucking Greece.
P.S. 16-19 = Same guy
@ExPopDel Got it. @20
@21 I never said Democrat or Republican. It is not my fault Obama represents his respective party. He could have been an Independent, my comment the same. Did you notice that i said past Administrations also? This would include Repubicans and Democrats. If a Repubican was trying to pull the same sh!t I would call it out just the same.
@22 I should quit my job so my unemployment benefits may actually contribute to net economic growth, thanks for clearing it up for me. It appears that being productively employed is out. The new in is government assistance.
@22 Keynes is a faggot and his multipliers are as useful as kouwe’s impotent limp dick. Go Hayek!
@17 – You shoulda known Wells Fargo IB wouldn’t get you a pe job
@25/OT: I only have one moniker, I have not posted anonymously in weeks.
Sincerely,
-@17/CB not 16, 18, or 19
@22 just in case you missed it that fool McCain is in damn near lock step with the socialists running the show in DC…
If what you say is true (and I really hope it is) then why don’t we all quit our jobs, extend the unemployment benefits for life for all…raise the payout to $500,000 per year for every man woman and child in the country…
We’d be sitting pretty. By your calculus we’be knocking the cover off the GDP ball
@28 You obviously misread the sarcasm in my quote. The irony is that I’m from a Canadian province where the top tax rate is 48.5% so really I’m in no position to criticise.
@31 the ways things are going here in the States we may wish for only 48.5%.
Apologies if anyone insulted one of our dear friends from the great white north.
“less jobs” should be “fewer jobs”
Carried interest is ordinary income . Private equity has been getting away with murder for years.
They should just shut up and pay taxes on ordinary income like us “small folk”
To all the people asking me if my logic is right, why shouldn’t we all quit our jobs to accept unemployment benfits:
First, idiots like you greatly explain Wall St’s role in the Credit Crisis. Second, to answer your question, would you rather have a 500k income (if that really is your income, your IQ suggests otherwise) or would you rather receive 10-15k in UI every year? Individual incentives explain your behavior. The trade-off is someone with no income spending nothing, or someone with 10-15k spending everything immediately. Its the marginal gain involved. Obviously we’d have a loss of GDP if people making 500k quit their jobs to make 10-15k.
Fucking Idiots. Seriously.
Hugs n Kisses,
22
What is with Options Douche and all these other lib posters? Go to Daily Kos where you belong. We know you don’t really work in finance.
@36, what is with people who don’t understand consumer spendings role in the economy and the importance of boosting it in a recession?
I’m sorry if being burdened with thought led you to believe I don’t work in finance.
@36 idiot, ask Bess where I work.
Bess – where does OptionsTrader work?
- Not 36 but an idiot.
@38 – What if Bess wants it to be her dirty little dark secret?
Plus, if you work where you said, you generally wouldn’t be a commie, so…
Regardless of political affiliation, I stand by my original post.
-#1
@38 How’s your PWM gig going +winkwink
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