i was particularly taken aback by this article in the Wall Street Journal today.
It seems that the private equity lobby is now preparing to pay off everyone possible to get them to campaign to keep Congress from closing the unintended loophole that allows industry participants to receive compensation in the form of carried interest and thereby pay only the 15% long term gains tax treatment, as opposed to paying tax on their earnings at ordinary income rates the way that all other US citizens and US residents do.
It seems to me patently clear that this tax treatment is patently unfair and violates the principal fundamentals of a tax system - that tax should be applied equitably. The argument that a lower tax rate allows private equity to invest in minority communities is absolutely absurd. I don't buy it if it comes from Magic Johnson, Robert Johnson or god. These ultra-wealthy private equity folks would gladly do the same job and make the same investments if they pay taxes at the same rate as the rest of us, and the extra tax revenues can be used to directly stimulate investments in less advantageous areas.
I guess Magic can be bought like everyone else. Hats off to Charly Rangel and some other Democrats for standing up to this. I hope that they close this loophole - it is the first real test of the stamina of the Democratic Congress.
Related Articles:
Private Equity is Like Cheap Sex by David Walsh - Aug 08, 2007
Making Private Equity/Hedge Managers Pay Same Tax Rate as Rest of Us Seems Ridiculous. Doesn't It? by DanS - Jul 12, 2007
Lloyd Blankfein on private equity and taxation by CherylW - Jun 23, 2007.
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