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On July 17 2012 11:55 xDaunt wrote:Show nested quote +On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible.
The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market.
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On July 17 2012 11:08 Danglars wrote:+ Show Spoiler +Obama's remarks in Virginia"If you've got a business, you didn't build that. Somebody else made that happen." ~ Obama, Roanoke Virginia last Friday Bet he wishes he could withdraw that pull-quote! Nat'l Federation of Independent Business already fired back ( Reponses, NFIB, Chamber of Commerce) since he downplays the personal risk and effort involved in business creation. In context he mentions initiative, and goes towards the argument that these successful, wealthy people have received very much from government and deserve to have their taxes raised to help others. Businesses received from education, their work force, aka he posits that they were helped by government and now much shoulder more burden for the expense of social programs. Small businesses are like ... we create jobs and spur economic growth in SPITE of government rather than massively helped by it. More and more rhetorical divide here. Is the collective more responsible for business growth or the individuals heading the business from hard work and smart decisions? We've seen Obama's view on this (You've benefited, I think I've cut what I could, now its your time to pay more!), guess we'll see how much the country agrees with this. Hope we see a gallup poll on how much the country thinks government spending is responsible for job creation, or agrees with the platform view that the rich need to pay more than they're currently paying in taxes. IDK about those trillion dollars of cuts he made that he mentions. Considering how much he has increased the federal budget right now, sounds like pure rhetoric. I don't even know if baseline budgeting (Projected growth 100$ million, so making it grow by only 75$ million is listed as cutting its budget by 75$ mil) can account for this. Doing some research into it.
It was a pretty ridiculous thing to say. As someone who owns their own, quite small .. 10 employees, small business I find it disgraceful he would say that I didn't do it. He is obviously just as out of touch as the media portrays Romney to be. I worked my butt off to get to the point I am at, and he wants to take credit because I went to a public high school? I want to thank all my teachers, and am now going to send them a check every month for doing their job.
I assume he also means that he didn't get into Columbia and Harvard Law, or he didn't become a Senator or the President. Someone else did that for him.
I am not a fan of either candidate, but if Romney uses this quote like he should I really don't see him losing.
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On July 17 2012 12:07 Omnipresent wrote:Show nested quote +On July 17 2012 11:55 xDaunt wrote:On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible. The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market.
Does carried interest actually hurt government revenues? If you paid the managers a salary it would be tax deductible for the business while it would be taxed at a higher rate for the individual. I think I'm going to have to pull out excel.
Edit: now that I'm thinking about it carried interest gets paid from the capital gains so I'm not sure how you'd structure a standard salary ex ante. You'd have to re-write the entire business relationship. Still thinking about the taxes though.
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On July 17 2012 11:44 xDaunt wrote:Show nested quote +On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Do you at least understand the policy reasoning behind the lower tax rates on capital gains?
By all means, xDaunt, edu-ma-cate me. I'll be the first to admit my understanding of US tax policy is rough.
I can understand taxes the appreciation of investments at a lower rate, but I wouldn't mind learning more about the reasons why.
And that doesn't change the fact that plenty of people like Romney game the system, such as getting paid in stock or equity so they pay less taxes.
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On July 17 2012 12:17 ThreeAcross wrote:Show nested quote +On July 17 2012 11:08 Danglars wrote:+ Show Spoiler +Obama's remarks in Virginia"If you've got a business, you didn't build that. Somebody else made that happen." ~ Obama, Roanoke Virginia last Friday Bet he wishes he could withdraw that pull-quote! Nat'l Federation of Independent Business already fired back ( Reponses, NFIB, Chamber of Commerce) since he downplays the personal risk and effort involved in business creation. In context he mentions initiative, and goes towards the argument that these successful, wealthy people have received very much from government and deserve to have their taxes raised to help others. Businesses received from education, their work force, aka he posits that they were helped by government and now much shoulder more burden for the expense of social programs. Small businesses are like ... we create jobs and spur economic growth in SPITE of government rather than massively helped by it. More and more rhetorical divide here. Is the collective more responsible for business growth or the individuals heading the business from hard work and smart decisions? We've seen Obama's view on this (You've benefited, I think I've cut what I could, now its your time to pay more!), guess we'll see how much the country agrees with this. Hope we see a gallup poll on how much the country thinks government spending is responsible for job creation, or agrees with the platform view that the rich need to pay more than they're currently paying in taxes. IDK about those trillion dollars of cuts he made that he mentions. Considering how much he has increased the federal budget right now, sounds like pure rhetoric. I don't even know if baseline budgeting (Projected growth 100$ million, so making it grow by only 75$ million is listed as cutting its budget by 75$ mil) can account for this. Doing some research into it. It was a pretty ridiculous thing to say. As someone who owns their own, quite small .. 10 employees, small business I find it disgraceful he would say that I didn't do it. He is obviously just as out of touch as the media portrays Romney to be. I worked my butt off to get to the point I am at, and he wants to take credit because I went to a public high school? I want to thank all my teachers, and am now going to send them a check every month for doing their job. I assume he also means that he didn't get into Columbia and Harvard Law, or he didn't become a Senator or the President. Someone else did that for him. I am not a fan of either candidate, but if Romney uses this quote like he should I really don't see him losing.
I understand you feeling annoyed at the comment but to be personally affected is silly. Its super clear that he is just saying that opportunities don't happen in a vacuum. You are right to bring the topic back to him. Columbia and Harvard as institutions are products of lifetimes of devoted stewardship and reinvestment. Simply taking advantage of those opportunities does not relieve him from his social obligation to those who make those opportunities possible. It is easy to focus entirely on how interchangeable workers are and forget how vital the work they do is.
In other words, of course you worked hard (if what you are saying is true) but you are part of a larger framework that makes your accomplishments possible.
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The very fact that Romney's wealth is an issue shows how silly politics is.
If you want to vote for/or against one of the candiates that's fine, but let the issues drive your votes.
If you vote against Obama because he has a middle easternish middle name, you fail.
If you vote against Romney because he has a big bank account, you fail.
Vote for the candidate you think will actually implement the best policies or the policies you most agree with.
That should be the discussion, not which elitist millionaire (they both are) is more in touch with Joe Everyman, because neither of them are. Almost all politicians are from elitist backgrounds and these two are no different.
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Obama had an elitist background?
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On July 17 2012 12:19 JonnyBNoHo wrote:Show nested quote +On July 17 2012 12:07 Omnipresent wrote:On July 17 2012 11:55 xDaunt wrote:On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible. The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market. Does carried interest actually hurt government revenues? If you paid the managers a salary it would be tax deductible for the business while it would be taxed at a higher rate for the individual. I think I'm going to have to pull out excel. Edit: now that I'm thinking about it carried interest gets paid from the capital gains so I'm not sure how you'd structure a standard salary ex ante. You'd have to re-write the entire business relationship. Still thinking about the taxes though.
Think of it more like a performace bonus than a standard salary. It's outcome based, not predetermined. The cut you (or the firm) is supposed to get after covering the initial investment is already established in the contract. We're just talking about how much tax you pay on that amount. You should pay capital gains (though more than 15%) on any capital you personally contributed to the investment, but the share of the investors' gains you get as a managing partner isn't capital gains in any sense of the word.
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On July 17 2012 12:36 Zaqwert wrote:
The very fact that Romney's wealth is an issue shows how silly politics is.
If you want to vote for/or against one of the candiates that's fine, but let the issues drive your votes.
If you vote against Obama because he has a middle easternish middle name, you fail.
If you vote against Romney because he has a big bank account, you fail.
Vote for the candidate you think will actually implement the best policies or the policies you most agree with.
That should be the discussion, not which elitist millionaire (they both are) is more in touch with Joe Everyman, because neither of them are. Almost all politicians are from elitist backgrounds and these two are no different.
While a lot of the stuff ranted on about in politics is a pointless sideshow, the issue of Romney's taxation is very relevant. A person's character says a lot about how they will handle the presidency and Romney's less-than-stellar character record isn't looking very good. Not only that, but why the hell would we want to elect a guy into the presidency when they game the system to pay less taxes than they should? That doesn't sound like a sound decision.
Also, Obama doesn't have an elitist background outside of going to Harvard Law, and you don't need to be raised elitist to do that. You really gotta check your facts dude.
http://en.wikipedia.org/wiki/Barack_Obama
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On July 17 2012 12:45 Omnipresent wrote:Show nested quote +On July 17 2012 12:19 JonnyBNoHo wrote:On July 17 2012 12:07 Omnipresent wrote:On July 17 2012 11:55 xDaunt wrote:On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible. The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market. Does carried interest actually hurt government revenues? If you paid the managers a salary it would be tax deductible for the business while it would be taxed at a higher rate for the individual. I think I'm going to have to pull out excel. Edit: now that I'm thinking about it carried interest gets paid from the capital gains so I'm not sure how you'd structure a standard salary ex ante. You'd have to re-write the entire business relationship. Still thinking about the taxes though. Think of it more like a performace bonus than a standard salary. It's outcome based, not predetermined. The cut you (or the firm) is supposed to get after covering the initial investment is already established in the contract. We're just talking about how much tax you pay on that amount. You should pay capital gains (though more than 15%) on any capital you personally contributed to the investment, but the share of the investors' gains you get as a managing partner isn't capital gains in any sense of the word.
Not sure it makes a difference though. I'm playing around with the numbers and it seems to be a wash. If you structure the carried interest as a management fee it will be tax deductible for the investor (carried interest is not). So there wouldn't be any gain to the government for changing the rules, other than public perception, correct?
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On July 17 2012 12:52 JonnyBNoHo wrote:Show nested quote +On July 17 2012 12:45 Omnipresent wrote:On July 17 2012 12:19 JonnyBNoHo wrote:On July 17 2012 12:07 Omnipresent wrote:On July 17 2012 11:55 xDaunt wrote:On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible. The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market. Does carried interest actually hurt government revenues? If you paid the managers a salary it would be tax deductible for the business while it would be taxed at a higher rate for the individual. I think I'm going to have to pull out excel. Edit: now that I'm thinking about it carried interest gets paid from the capital gains so I'm not sure how you'd structure a standard salary ex ante. You'd have to re-write the entire business relationship. Still thinking about the taxes though. Think of it more like a performace bonus than a standard salary. It's outcome based, not predetermined. The cut you (or the firm) is supposed to get after covering the initial investment is already established in the contract. We're just talking about how much tax you pay on that amount. You should pay capital gains (though more than 15%) on any capital you personally contributed to the investment, but the share of the investors' gains you get as a managing partner isn't capital gains in any sense of the word. Not sure it makes a difference though. I'm playing around with the numbers and it seems to be a wash. If you structure the carried interest as a management fee it will be tax deductible for the investor (carried interest is not). So there wouldn't be any gain to the government for changing the rules, other than public perception, correct?
It's not a management fee. It's a carry. Closing the tax loophole doesn't change that. Also, management fees aren't tax deductable for all investors, just specific types of non-profit, right? I know these groups make up a big portion of PE and hedge fund investors, but it's worth noting anyway.
You're right about one thing, though. The actual effect on the budget would be negligible - a few billion dollars. It's mostly an issue of basic fairness and optics. The carried interest tax credit is unfair, looks bad, and doesn't do anything productive. It seems like low hanging fruit to me. Or at least it would be, if the tiny fraction of the population that gets it didn't turn around and use a portion of their gains to buy politicians who will maintain the status quo.
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Almost every major politician is completely unscrupulous. It's impossible to succeed in politics without being such. There are tons of nasty skeletons in both Romney and Obama's closests.
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On July 17 2012 10:49 JonnyBNoHo wrote:This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways. ![[image loading]](http://ctj.org/images/taxday2012table.jpg) Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT.
Great chart. Sure there might be little things or whatnot, but it's useful to see the approximate total taxes paid for all levels of government put together.
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On July 17 2012 12:35 Velocirapture wrote:Show nested quote +On July 17 2012 12:17 ThreeAcross wrote:On July 17 2012 11:08 Danglars wrote:+ Show Spoiler +Obama's remarks in Virginia"If you've got a business, you didn't build that. Somebody else made that happen." ~ Obama, Roanoke Virginia last Friday Bet he wishes he could withdraw that pull-quote! Nat'l Federation of Independent Business already fired back ( Reponses, NFIB, Chamber of Commerce) since he downplays the personal risk and effort involved in business creation. In context he mentions initiative, and goes towards the argument that these successful, wealthy people have received very much from government and deserve to have their taxes raised to help others. Businesses received from education, their work force, aka he posits that they were helped by government and now much shoulder more burden for the expense of social programs. Small businesses are like ... we create jobs and spur economic growth in SPITE of government rather than massively helped by it. More and more rhetorical divide here. Is the collective more responsible for business growth or the individuals heading the business from hard work and smart decisions? We've seen Obama's view on this (You've benefited, I think I've cut what I could, now its your time to pay more!), guess we'll see how much the country agrees with this. Hope we see a gallup poll on how much the country thinks government spending is responsible for job creation, or agrees with the platform view that the rich need to pay more than they're currently paying in taxes. IDK about those trillion dollars of cuts he made that he mentions. Considering how much he has increased the federal budget right now, sounds like pure rhetoric. I don't even know if baseline budgeting (Projected growth 100$ million, so making it grow by only 75$ million is listed as cutting its budget by 75$ mil) can account for this. Doing some research into it. It was a pretty ridiculous thing to say. As someone who owns their own, quite small .. 10 employees, small business I find it disgraceful he would say that I didn't do it. He is obviously just as out of touch as the media portrays Romney to be. I worked my butt off to get to the point I am at, and he wants to take credit because I went to a public high school? I want to thank all my teachers, and am now going to send them a check every month for doing their job. I assume he also means that he didn't get into Columbia and Harvard Law, or he didn't become a Senator or the President. Someone else did that for him. I am not a fan of either candidate, but if Romney uses this quote like he should I really don't see him losing. I understand you feeling annoyed at the comment but to be personally affected is silly. Its super clear that he is just saying that opportunities don't happen in a vacuum. You are right to bring the topic back to him. Columbia and Harvard as institutions are products of lifetimes of devoted stewardship and reinvestment. Simply taking advantage of those opportunities does not relieve him from his social obligation to those who make those opportunities possible. It is easy to focus entirely on how interchangeable workers are and forget how vital the work they do is. In other words, of course you worked hard (if what you are saying is true) but you are part of a larger framework that makes your accomplishments possible.
Of course no one lives in a vacuum. I 'owe' the government because it exists. Without the country we wouldn't have the opportunities we have, but without the people that put in the hard work that owning a business requires no one would have a job.
I don't hold grudges against people that leave my company because they have found something bigger or better. Without me, maybe someone wouldn't have learned something that would prove vital in another situation. Did I help in their progression? Sure I did, but I don't expect them to send me a kickback because I provided them an avenue to increase their skills. On a reference call, I sure as hell don't tell the prospective employer that employee didn't earn anything. They only know this stuff because of me. I tell the employer that the employee worked their butt off to get where they are, and they would be an asset to any staff.
I don't care how many public people were around, without ME my small business wouldn't be around.
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On July 17 2012 13:06 Omnipresent wrote:Show nested quote +On July 17 2012 12:52 JonnyBNoHo wrote:On July 17 2012 12:45 Omnipresent wrote:On July 17 2012 12:19 JonnyBNoHo wrote:On July 17 2012 12:07 Omnipresent wrote:On July 17 2012 11:55 xDaunt wrote:On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible. The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market. Does carried interest actually hurt government revenues? If you paid the managers a salary it would be tax deductible for the business while it would be taxed at a higher rate for the individual. I think I'm going to have to pull out excel. Edit: now that I'm thinking about it carried interest gets paid from the capital gains so I'm not sure how you'd structure a standard salary ex ante. You'd have to re-write the entire business relationship. Still thinking about the taxes though. Think of it more like a performace bonus than a standard salary. It's outcome based, not predetermined. The cut you (or the firm) is supposed to get after covering the initial investment is already established in the contract. We're just talking about how much tax you pay on that amount. You should pay capital gains (though more than 15%) on any capital you personally contributed to the investment, but the share of the investors' gains you get as a managing partner isn't capital gains in any sense of the word. Not sure it makes a difference though. I'm playing around with the numbers and it seems to be a wash. If you structure the carried interest as a management fee it will be tax deductible for the investor (carried interest is not). So there wouldn't be any gain to the government for changing the rules, other than public perception, correct? It's not a management fee. It's a carry. Closing the tax loophole doesn't change that. Also, management fees aren't tax deductable for all investors, just specific types of non-profit, right? I know these groups make up a big portion of PE and hedge fund investors, but it's worth noting anyway. You're right about one thing, though. The actual effect on the budget would be negligible - a few billion dollars. It's mostly an issue of basic fairness and optics. The carried interest tax credit is unfair, looks bad, and doesn't do anything productive. It seems like low hanging fruit to me. Or at least it would be, if the tiny fraction of the population that gets it didn't turn around and use a portion of their gains to buy politicians who will maintain the status quo.
OK, so I looked into it a bit more and (guess what!) it's a bit more complicated than I first though. It is deductible, though you would either:
Have to itemize and the deduction would be subject to various complicated crap that I care not to mention. Look it up if you are interested here.
Or it would be pre-deducted by the management company (most likely I'll guess).
So, if you are itemizing the fees it would mean that the carried interest loophole would have a small impact on the total taxes the government receives. It it's pre-deducted I have no Earthly what the net impact would be since I'm not sure how the fees (which come out of the investor's interest payments, cap gains and dividends (which are all taxed differently)) would flow through the PE firm and into the manager as a salary / bonus / whatever.
Now as for what should be done that's a tough question too. I agree that it makes things look bad (which is bad in its own right) but I also think that it is a very good financial structure since it aligns investor interests with the manager's interests very efficiently.
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The business thing definitely a really stupid thing to say. He will have to back track on it otherwise he'd be defending near hyperbole or at least an over emphasis on what he was trying to say. Usually not good when everything you say is scrutinized by everyone everywhere.
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On July 17 2012 13:32 ThreeAcross wrote:Show nested quote +On July 17 2012 12:35 Velocirapture wrote:On July 17 2012 12:17 ThreeAcross wrote:On July 17 2012 11:08 Danglars wrote:+ Show Spoiler +Obama's remarks in Virginia"If you've got a business, you didn't build that. Somebody else made that happen." ~ Obama, Roanoke Virginia last Friday Bet he wishes he could withdraw that pull-quote! Nat'l Federation of Independent Business already fired back ( Reponses, NFIB, Chamber of Commerce) since he downplays the personal risk and effort involved in business creation. In context he mentions initiative, and goes towards the argument that these successful, wealthy people have received very much from government and deserve to have their taxes raised to help others. Businesses received from education, their work force, aka he posits that they were helped by government and now much shoulder more burden for the expense of social programs. Small businesses are like ... we create jobs and spur economic growth in SPITE of government rather than massively helped by it. More and more rhetorical divide here. Is the collective more responsible for business growth or the individuals heading the business from hard work and smart decisions? We've seen Obama's view on this (You've benefited, I think I've cut what I could, now its your time to pay more!), guess we'll see how much the country agrees with this. Hope we see a gallup poll on how much the country thinks government spending is responsible for job creation, or agrees with the platform view that the rich need to pay more than they're currently paying in taxes. IDK about those trillion dollars of cuts he made that he mentions. Considering how much he has increased the federal budget right now, sounds like pure rhetoric. I don't even know if baseline budgeting (Projected growth 100$ million, so making it grow by only 75$ million is listed as cutting its budget by 75$ mil) can account for this. Doing some research into it. It was a pretty ridiculous thing to say. As someone who owns their own, quite small .. 10 employees, small business I find it disgraceful he would say that I didn't do it. He is obviously just as out of touch as the media portrays Romney to be. I worked my butt off to get to the point I am at, and he wants to take credit because I went to a public high school? I want to thank all my teachers, and am now going to send them a check every month for doing their job. I assume he also means that he didn't get into Columbia and Harvard Law, or he didn't become a Senator or the President. Someone else did that for him. I am not a fan of either candidate, but if Romney uses this quote like he should I really don't see him losing. I understand you feeling annoyed at the comment but to be personally affected is silly. Its super clear that he is just saying that opportunities don't happen in a vacuum. You are right to bring the topic back to him. Columbia and Harvard as institutions are products of lifetimes of devoted stewardship and reinvestment. Simply taking advantage of those opportunities does not relieve him from his social obligation to those who make those opportunities possible. It is easy to focus entirely on how interchangeable workers are and forget how vital the work they do is. In other words, of course you worked hard (if what you are saying is true) but you are part of a larger framework that makes your accomplishments possible. Of course no one lives in a vacuum. I 'owe' the government because it exists. Without the country we wouldn't have the opportunities we have, but without the people that put in the hard work that owning a business requires no one would have a job. I don't hold grudges against people that leave my company because they have found something bigger or better. Without me, maybe someone wouldn't have learned something that would prove vital in another situation. Did I help in their progression? Sure I did, but I don't expect them to send me a kickback because I provided them an avenue to increase their skills. On a reference call, I sure as hell don't tell the prospective employer that employee didn't earn anything. They only know this stuff because of me. I tell the employer that the employee worked their butt off to get where they are, and they would be an asset to any staff. I don't care how many public people were around, without ME my small business wouldn't be around.
The gist of Obama's words was that society helped you out, so you have an obligation to help society out.
Obama
The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.
That's it. No need to be up in arms about a small statement like that.
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On July 17 2012 13:06 Omnipresent wrote:Show nested quote +On July 17 2012 12:52 JonnyBNoHo wrote:On July 17 2012 12:45 Omnipresent wrote:On July 17 2012 12:19 JonnyBNoHo wrote:On July 17 2012 12:07 Omnipresent wrote:On July 17 2012 11:55 xDaunt wrote:On July 17 2012 11:45 Velocirapture wrote:On July 17 2012 11:29 Defacer wrote:On July 17 2012 10:49 JonnyBNoHo wrote:
This could possibly be relevant. There might be a few points to nitpick about it but you could most likely nitpick both ways.
Edit: There's only a real problem once you get to the top 1%. If anyone can find the same stats for other OECD countries let me know! I'm have in problem finding numbers that include VAT. The problem is the that there are plenty of rich people, like Romney, that don't pay close to 30%. They find loopholes, like reporting income as capital gains. I believe the Ryan budget proposed the 25% figure based on what most people actually pay, and rationalized it by proposing the closing of loopholes in the tax system. The problem with the Ryan budget is that it's incomplete -- it defers what loopholes should be closed to a third-party committee, so there's no way to know if it's viable. Romney I believe he has already stated he wouldn't raise taxes on capital gains (of course). That's my rudimentary understanding of the dilemma anyways. Just to drive this point home. Washington Post ArticleRomney paid an effective tax rate of 13.9% in 2010. I don't know how to tackle the problem but I think it is pretty clear this should be impossible. When you consider the policies behind the low capital gains tax rate, it becomes pretty clear why it should be possible. The carried interest tax credit is a joke. Even if you think the current capital gains rate is healthy, there's really no way to justify giving people massive tax breaks for gambling with other people's money. The investors (i.e. the people who are actually carrying the risk) already get a capital gains rate, so eliminating carried interest doesn't pull money out of the market. Does carried interest actually hurt government revenues? If you paid the managers a salary it would be tax deductible for the business while it would be taxed at a higher rate for the individual. I think I'm going to have to pull out excel. Edit: now that I'm thinking about it carried interest gets paid from the capital gains so I'm not sure how you'd structure a standard salary ex ante. You'd have to re-write the entire business relationship. Still thinking about the taxes though. Think of it more like a performace bonus than a standard salary. It's outcome based, not predetermined. The cut you (or the firm) is supposed to get after covering the initial investment is already established in the contract. We're just talking about how much tax you pay on that amount. You should pay capital gains (though more than 15%) on any capital you personally contributed to the investment, but the share of the investors' gains you get as a managing partner isn't capital gains in any sense of the word. Not sure it makes a difference though. I'm playing around with the numbers and it seems to be a wash. If you structure the carried interest as a management fee it will be tax deductible for the investor (carried interest is not). So there wouldn't be any gain to the government for changing the rules, other than public perception, correct? It's not a management fee. It's a carry. Closing the tax loophole doesn't change that. Also, management fees aren't tax deductable for all investors, just specific types of non-profit, right? I know these groups make up a big portion of PE and hedge fund investors, but it's worth noting anyway. You're right about one thing, though. The actual effect on the budget would be negligible - a few billion dollars. It's mostly an issue of basic fairness and optics. The carried interest tax credit is unfair, looks bad, and doesn't do anything productive. It seems like low hanging fruit to me. Or at least it would be, if the tiny fraction of the population that gets it didn't turn around and use a portion of their gains to buy politicians who will maintain the status quo.
This isn't necessarily true. Tax raises on the rich can potentially raise trillions over several years, while it won't solve the deficit straight away, it'll go a long way to helping to balance the budget.
Source:
http://www.nytimes.com/2012/03/28/business/economy/the-case-for-raising-top-tax-rates.html?pagewanted=2
http://www.taxpolicycenter.org/taxtopics/2013-Budget-Introduction.cfm
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The gist of Obama's words was that society helped you out, so you have an obligation to help society out. Show nested quote +
Obama
The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.
That's it. No need to be up in arms about a small statement like that.
I guess the other side would be ... if government would just stop helping me out so much, maybe then I could expand my business and hire on additional workers! Complying with regulation on their business, such as the ACA and an increasing burden of taxes do not impel them to make more risky ventures designed to become richer. To give some examples again,
“While we respect the Court's decision, today’s Supreme Court ruling does not change the reality that the health care law is fundamentally flawed. Left unchanged, it will cost many Americans their employer-based health insurance, undermine job creation, and raise health care costs for all.[emphasis mine]
Perception here is reality, and Romney himself is fighting to stay shiny on creating American jobs despite attacks on him that his track record at Bain shows the opposite (Shady dealings, even though business owners can sympathize with shipping jobs overseas -- they've been faced with the same attractive prospect.) Obama handed him a slow ball he can knock out of the park ... if his campaign gets out of its sluggish track. I think I've seen him fighting hardest at the nomination straits and won't see anything comparable all the way till November.
Then again, last president to be elected with this high of unemployment was FDR back over 60 years ago. Carville got Clinton in yelling, "It's the economy, stupid" at 7.5%. You start to look back 4 years ago and maybe it looks more rosy than it looked then and maybe Obama has had enough time to turn it around (Dems - It was just too big a hole).
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On July 17 2012 17:11 Danglars wrote:
Then again, last president to be elected with this high of unemployment was FDR back over 60 years ago. Carville got Clinton in yelling, "It's the economy, stupid" at 7.5%. You start to look back 4 years ago and maybe it looks more rosy than it looked then and maybe Obama has had enough time to turn it around (Dems - It was just too big a hole).
What makes this election so interesting that polls indicate that even those Obama's job approval numbers are down (people rate his job performance low), people still like him as a person.
Historical question: When is the last time the clearly less likeable candidate beat the clearly more likeable one for the White House? The answer is, a long time. I put the question to Gallup, which didn’t have historical numbers at hand. But doing some noodling around on my own suggests that you have to go back to 1968 to find such a result.
In 2004, George W. Bush generally led the likeable category. Pew emailed me some numbers—they had Bush leading John Kerry on likeability by 47 to 36 percent in September 2004. Interestingly, Kerry caught up and even went ahead after the first debate. But even so, voters judged both very likeable—70 percent for Kerry, and 65 percent for Bush. In 2000, Bush usually topped Al Gore, but not by massive margins. An October 2000 poll gave Bush an 11-point margin. Pew had a nine-point margin for Bush around the same time.
Before then, numbers get a little harder to come by. But crusty old Bob Dole was surely not considered more likeable than Bill Clinton in 1996. The 1992 Clinton-George H.W. Bush matchup was probably close. But just think back over the elections. The “wooden” Michael Dukakis in 1988 wasn’t exactly radiating intense bonhomie. Ronald Reagan was extremely likeable on a personal level to most people. Jimmy Carter had that big smile in 1976. Et cetera. As I say, I would imagine that it’s 1968, when the surly Dick beat the Happy Warrior, although by just a half million votes out of more than 70 million cast. But even Nixon was probably not clearly less likeable than Humphrey. After all, he’d been the vice president, he’d been on the national stage for nearly 20 years; the man definitely had his backers.
Romney, though? This is the biggest washout of modern times, folks. Gallup just this week put the likeability ratings at Obama 60, Romney 31. It’s not that Obama’s number is unusually high. Look back at those Kerry-Bush numbers. Americans are an open-hearted lot, at least presumptively, so they want to like the guy who’s going be the president. But they Do. Not. Like. Mitt. Romney.
Funny quote from same article.
He also—and this actually is interesting, because it’s something our normal public discourse does not like to admit or allow for—is way too rich. [...] It’s okay to be worth a gajillion dollars if you’re Bill Gates or Steve Jobs and have made everyone’s lives more interesting and cooler. But what’s Mitt Romney done? Helped give us Domino’s Pizza.
http://www.thedailybeast.com/articles/2012/05/13/michael-tomasky-on-mitt-romney-the-unlikable-presidential-candidate.html
No one wants to hire or vote for a guy they despise. And Romney is supernaturally unlikeable -- to the point that the entire Republican party was practically turning over stones trying to fine any other viable candidate during the nomination process.
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EPT
