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Taxing Capital Gains

DeacMan said:
Not if said company formed a company that it allowed you to invest in. But per RJ the jobs created by these companies are not as valuable as jobs created by other companies. Again, fascinating.
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sort of... but then its basically like a JV I guess

just a weird and very specific situation to get riled up about is all i'm saying
 
DeacMan said:
Yep. One of the underlying tenants of many of the folks on this thread is that sending more money to the Federal government is a good thing.
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this is my biggest issue when lawyers get involved in these tax debates. most think under the assumption that maximizing tax revenue is the goal. fuck that.
 
buckets said:
what's your issue with carried interest?

My philosophical problem with more tax on capital gains is that investing money is a risk. It isn't a salary, it isn't a contractually obligated return. You are taking a risk and and investing in something (which more often than not is good for the overall economy) and I think there should be some benefit to that income generated rather than just your plain old salary. Maybe the difference between ordinary and cap gains is a little too wide, but its stupid to think they should be the same rate imo.
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Generally (although I have seen some where they are actually a subordinate equity interest with significant, though less than one would need to put in for a senior equity interest, capital contributions) carried interests are fees for services. Based upon your risk based reason for taxing cap gains different than wages, I don't think you are going to agree, but I just don't think a hedge fund manager should get cap gains treatment on his compensation (or a portion of it), when all of mine (or the McDonalds worker or whatever) is taxed at ordinary income rates. If my compensation was not fixed, but based more on firm revenue (or specifically my revenue), there would still be plenty of risk involved, but it would still be ordinary income to me.
 
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Wakelaw2006 said:
Generally (although I have seen some where they are actually a subordinate equity interest with significant, though less than one would need to put in for a senior equity interest, capital contributions) carried interests are fees for services. Based upon your risk based reason for taxing cap gains different than wages, I don't think you are going to agree, but I just don't think a hedge fund manager should get cap gains treatment on his compensation (or a portion of it), when all of mine (or the McDonalds worker or whatever) is taxed at ordinary income rates. If my compensation was not fixed, but based more on firm revenue (or specifically my revenue), there would still be plenty of risk involved, but it would still be ordinary income to me.
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I'm not an expert on how the tax works, but it would make some sense if the carried interest value was taxed on the day it is granted (ie investment date) as ordinary income. And then any appreciation in the value of the carried interest taxed as a capital gain. But maybe that's essentially how it does work, because it seems like the value would almost always be zero when granted since it is just a portion of the investment return.

If you sold for the same price you bought (which would be the fair value assumption on day 1) then you would just be returning the capital and you wouldn't have earned any carried interest with which to make it rain.
 
isn't the idea of the laffer curve to increase tax revenues? all tax policies should aim at increasing revenue with positive externalities (better business environment, better social environment, etc.).

i haven't read this whole thread because it looks like a total clusterfuck. capital gains does encourage people to be owner-investors of their money which i think is pretty quintessentially american. have we talked about the villainization fo cap gains unless it's on a home?
 
buckets said:
I'm not an expert on how the tax works, but it would make some sense if the carried interest value was taxed on the day it is granted (ie investment date) as ordinary income. And then any appreciation in the value of the carried interest taxed as a capital gain. But maybe that's essentially how it does work, because it seems like the value would almost always be zero when granted since it is just a portion of the investment return.

If you sold for the same price you bought (which would be the fair value assumption on day 1) then you would just be returning the capital and you wouldn't have earned any carried interest with which to make it rain.
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i'm pretty sure all distributions are handled as capgains for all partners in a fund be them lp or gp.
 
maybe one solution is to peg the tax rate on the amount of capital gains that make up your total income.

this would tax those that basically get paid/live off capital gains but not penalize those working stiffs like us that want to invest?
 
buckets said:
maybe one solution is to peg the tax rate on the amount of capital gains that make up your total income.

this would tax those that basically get paid/live off capital gains but not penalize those working stiffs like us that want to invest?
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The system is somewhat already set up for the reverse of that with the active/passive loss rules. It encourages active losses and discourages passive losses ... whereas I think you are saying encourage passive gain but tax active gain as ordinary income.
 
RJKarl said:
They provide a false liquidity. It's not about the value of the company. If the stock is worth selling, then sell it.

Why should it be higher? Because their actions can create false value, can harm longer term investors and are more likely to be manipulated by a small group of people who aren't at all interested in the company.
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Is false liquidity even a thing? Going to the bolded part, if it wasn't for these ultra-short traders you might not be able to sell something when you wanted to sell it....or you might have to take a bath on it to sell it.

I can see how someone could say they are creating false value, but that argument is incorrect.
 
2&2 Slider To Leyritz said:
The system is somewhat already set up for the reverse of that with the active/passive loss rules. It encourages active losses and discourages passive losses ... whereas I think you are saying encourage passive gain but tax active gain as ordinary income.
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exactly
 
we wouldn't even have to tax capital if we all owned it communally. imagine how freeing that would be.
 
Nobody really thinks about cap gains with respect to homes because you're already able to exclude 250K (500K Joint) on the sale of your primary residence.
 
DeaconCav06 said:
Nobody really thinks about cap gains with respect to homes because you're already able to exclude 250K (500K Joint) on the sale of your primary residence.
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my point exactly. thanks realtors.
 
Do people seriously not understand the tax incentives towards ownership of the means of production?

You can buy stock in any American company worth owning through any number of online providers (or from the companies themselves on AST/Computershare), for less than it takes to buy a fast food meal for lunch. Capital gains tax rates are established to encourage ownership in our economy: which----am I really having to explain this?----is a GREAT thing. Look into it, and teach someone who has never been a part of it to do the same. That actually helps someone.
 
Sure I understand the tax incentives. Should they be greater than the tax incentives to work?
 
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