David Bonderman

David Bonderman Is Thinking Things

Sure, he’s thinking about all sorts of things, just not too hard. Read more »

I feel like this came out wrong:

The idea that capital gains treatment should only be available to those with money to invest would advance a policy that puts a higher value on financial contributions than vision, hard work and other forms of sweat equity.

That’s from Steve Judge, president of the Private Equity Growth Capital Council, and I think he just said “the idea that capital gains treatment should only be for gains to capital is unfair to people who earn their income from labor,” and, I mean, that’s certainly a position you can have, but … I dunno, that’s not how I’d argue for taxing my labor at a lower rate than other people’s labor?1

It’s from this very funny FT article about the incidence of changes to private-equity taxation. Basically you can just about imagine, if you have an overactive imagination, that a second Obama term would bring changes to the tax treatment of carried interest so that the 20 in private equity’s 2-and-20 would be taxed as ordinary income (35%) instead of capital gains (15%). As with any tax on a business it’s worth asking who actually pays it, and one possible answer is “well, if we amend our partnership agreements to require LPs to gross up managers for any change in the tax code, then the LPs will pay it, won’t they.” That answer turns out to be (1) something that people have actually tried and (2) wrong: Read more »