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It's pretty impressive for someone running a fund to call publicly for the end of the carried interest loophole.

by pg 14y ago

mattdeboard 14y ago
Why?
- pg 14y ago
  Because people running funds are the beneficiaries of it.
  - aneth4 14y ago
    He does specification call this out - that something must be truly egregious when the beneficiaries of a law call for its repeal. What's your position? Should we discount investment taxes to encourage reallocation of capital and tax earned income highly to discourage value add labour, or stop asking actual workers to suck it up because they can't flee like capital can?
jspthrowaway2 14y ago
I thought the same thing. I think he anticipated our thoughts when he wrote (paraphrased) "it's so egregious, I benefit from it and I want it to end." Maybe, just maybe, I misjudged Arrington a bit.
- jacques_chester 14y ago
  I believe it's perfectly legal to donate any amount of money to the US government. So if he wants to pay more tax, he can. He may also rearrange his tax affairs to increase his tax liability. Same thing, but with the exciting frisson of potential coercion (gosh!). He doesn't seem to be doing either of these, however. Possibly because that might lower his social status vis-a-vis others of his kind. So actually, he's prepared to make a great personal sacrifice ... if everyone in his class does too. It seems less impressive when you put it that way, but that's human nature.
  - arn 14y ago
    It's not as selfish as you try to spin it. There are any number of political and economic policies that you might favor, but that only make sense in aggregate. I might favor more NASA funding, but I'm not going to write a check and donate to NASA. That doesn't make my desire for more NASA funding any less earnest than someone who wants less funding for NASA.
    - jacques_chester 14y ago
      It is exactly as selfish as I spun it. That's what "I won't give you X without receiving Y" means. I'm not judging, I'm exactly the same. I'm much happier if everyone else is beggared at the same time in the same way.
      - arn 14y ago
        Not sure if selfish quite captures it. It's more practical consideration. I'll give you X, if everyone else is also giving you X. Otherwise, my X won't make any difference.
        jacques_chester 14y ago
        Looking at again: it's a variant of the prisoner's dilemma. If everyone moves, nobody is worse off. If you move on your own, you are worse off. If everyone else moves and you don't, you're best off. Unsurprisingly, the dominant strategy is to write blog posts saying "we really ought to amend the taxation laws" :D
        jdotjdot 14y ago
        I don't find this to be negative, though.
  - eli_gottlieb 14y ago
    Oh shut up with this already. Private property is just as coercive as taxation in the first place. You do not have a God-given right to make hundreds of thousands of dollars by investing millions of dollars and pay nothing towards the upkeep of society. Basic freaking social contract theory, and, in fact, basic law: financial instruments and corporations could not exist as they do except by government fiat. Second, yes, he will make the sacrifice if everyone else does it. That's sensible. You don't solve large-scale systemic problems by individual action, not even mass individual action, but only by collective action. Again, this is just how the world works.
Mc_Big_G 14y ago
It seems impressive, and but is there really a risk in saying it?
chatmasta 14y ago
Paul, I have a tremendous amount of respect for you. In many ways you serve as a role model to me. But I think you need to be careful calling what Arrington describes a "loophole." Yes, the people running the funds are the beneficiaries of this specific "hole" in the tax code. But have you considered that this could be a loophole by design? In other words, an incentive? In many ways, capital is the eponymous character of capitalism. Capital drives our economy. It feeds our society. It's also a good indicator of our prosperity level. No economist will argue with the fact that capital begets more capital, and therefore we should encourage any mechanism that creates it. Normally I avoid such generalities, but economists accept this as such a simple fact that it would be impossible for them to disagree with it. This "loophole" in the tax code is a great example of an incentive for investing capital. It makes sense to place that incentive in the tax code because investing capital leads to more capital. Policy makers want people running funds to "exploit" this "loophole." The tax benefits are a reward for efficiently "putting the capital to work," so to speak. If we can agree that this "loophole" in the tax code functions as an incentive, then I think we should also agree not to call it a loophole. When we call this a loophole rather than an incentive, we make it appear as though our profession (well, your profession... I'm still in college) is the business of exploiting loopholes. That is not what we value and I think we should respect ourselves enough to avoid this perception. Thanks Paul -- I hope you find time to read this.
- jacalata 14y ago
  Of course it was created as an incentive, there's a nice justification for pretty much every line of the millions in the tax code, however it is considered a loophole because it turns out that it is really easy to manipulate the structure of investment deals so that all the income is gained as carried interest, and it even more surprisingly turns out people actually do this if there's sufficient incentive, so a lot of people now redefine what would have been 'income' into 'carried interest' in a way that appears not to have been intended when the rule was created. If you really want people to respect your profession (I assume you intend to go into finance?) you should focus a little more on the ethics of what you actually do and less on how to spin it.
  - 14y ago
credo 14y ago
It is good, but he most certainly isn't unique in this regard and he is late to the game. For several years, Fred Wilson has written that "carried interest" should be taxed as ordinary income. For instance, see http://www.avc.com/a_vc/2010/05/why-taxing-carried-interest-as-ordinary-income-is-good-policy.html http://www.avc.com/a_vc/2010/05/why-taxing-carried-interest-... (and my guess is that Fred Wilson earns more carried-interest-income than Mike Arrington whose biggest payout was probably the sale of TechCrunch.) I'm sure that many other investors (e.g Nick Hanauer, here in Seattle) have the same (or more progressive) positions Btw on some of the other comments ...this fiscal deal wasn't about cutting loopholes. It covered a lot of other more-urgent stuff. There is no way they could have tackled less-urgent stuff in this bill. However, in the past, Obama has called for cutting loopholes and he stressed that point in his speech tonight. Last year, in October, Romney had also stressed the need to cut loopholes. Cutting loopholes is very hard because each loophole has a strong lobby behind it, but I hope the two parties are able to agree on cutting some of these outrageous loopholes.
deleted 14y ago
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deleted 14y ago
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It's pretty impressive for someone running a fund to call publicly for the end of the carried interest loophole.

by pg 14y ago

It's pretty impressive for someone running a fund to call publicly for the end of the carried interest loophole.

mattdeboard 14y ago

Why?

pg 14y ago
Because people running funds are the beneficiaries of it.
- aneth4 14y ago
  He does specification call this out - that something must be truly egregious when the beneficiaries of a law call for its repeal. What's your position? Should we discount investment taxes to encourage reallocation of capital and tax earned income highly to discourage value add labour, or stop asking actual workers to suck it up because they can't flee like capital can?

jspthrowaway2 14y ago

I thought the same thing. I think he anticipated our thoughts when he wrote (paraphrased) "it's so egregious, I benefit from it and I want it to end." Maybe, just maybe, I misjudged Arrington a bit.

jacques_chester 14y ago
I believe it's perfectly legal to donate any amount of money to the US government. So if he wants to pay more tax, he can. He may also rearrange his tax affairs to increase his tax liability. Same thing, but with the exciting frisson of potential coercion (gosh!). He doesn't seem to be doing either of these, however. Possibly because that might lower his social status vis-a-vis others of his kind. So actually, he's prepared to make a great personal sacrifice ... if everyone in his class does too. It seems less impressive when you put it that way, but that's human nature.
- arn 14y ago
  It's not as selfish as you try to spin it. There are any number of political and economic policies that you might favor, but that only make sense in aggregate. I might favor more NASA funding, but I'm not going to write a check and donate to NASA. That doesn't make my desire for more NASA funding any less earnest than someone who wants less funding for NASA.
  - jacques_chester 14y ago
    It is exactly as selfish as I spun it. That's what "I won't give you X without receiving Y" means. I'm not judging, I'm exactly the same. I'm much happier if everyone else is beggared at the same time in the same way.
    - arn 14y ago
      Not sure if selfish quite captures it. It's more practical consideration. I'll give you X, if everyone else is also giving you X. Otherwise, my X won't make any difference.
      - jacques_chester 14y ago
        Looking at again: it's a variant of the prisoner's dilemma. If everyone moves, nobody is worse off. If you move on your own, you are worse off. If everyone else moves and you don't, you're best off. Unsurprisingly, the dominant strategy is to write blog posts saying "we really ought to amend the taxation laws" :D
        jdotjdot 14y ago
        I don't find this to be negative, though.
- eli_gottlieb 14y ago
  Oh shut up with this already. Private property is just as coercive as taxation in the first place. You do not have a God-given right to make hundreds of thousands of dollars by investing millions of dollars and pay nothing towards the upkeep of society. Basic freaking social contract theory, and, in fact, basic law: financial instruments and corporations could not exist as they do except by government fiat. Second, yes, he will make the sacrifice if everyone else does it. That's sensible. You don't solve large-scale systemic problems by individual action, not even mass individual action, but only by collective action. Again, this is just how the world works.

Mc_Big_G 14y ago

It seems impressive, and but is there really a risk in saying it?

chatmasta 14y ago

Paul, I have a tremendous amount of respect for you. In many ways you serve as a role model to me. But I think you need to be careful calling what Arrington describes a "loophole." Yes, the people running the funds are the beneficiaries of this specific "hole" in the tax code. But have you considered that this could be a loophole by design? In other words, an incentive? In many ways, capital is the eponymous character of capitalism. Capital drives our economy. It feeds our society. It's also a good indicator of our prosperity level. No economist will argue with the fact that capital begets more capital, and therefore we should encourage any mechanism that creates it. Normally I avoid such generalities, but economists accept this as such a simple fact that it would be impossible for them to disagree with it. This "loophole" in the tax code is a great example of an incentive for investing capital. It makes sense to place that incentive in the tax code because investing capital leads to more capital. Policy makers want people running funds to "exploit" this "loophole." The tax benefits are a reward for efficiently "putting the capital to work," so to speak. If we can agree that this "loophole" in the tax code functions as an incentive, then I think we should also agree not to call it a loophole. When we call this a loophole rather than an incentive, we make it appear as though our profession (well, your profession... I'm still in college) is the business of exploiting loopholes. That is not what we value and I think we should respect ourselves enough to avoid this perception. Thanks Paul -- I hope you find time to read this.

jacalata 14y ago
Of course it was created as an incentive, there's a nice justification for pretty much every line of the millions in the tax code, however it is considered a loophole because it turns out that it is really easy to manipulate the structure of investment deals so that all the income is gained as carried interest, and it even more surprisingly turns out people actually do this if there's sufficient incentive, so a lot of people now redefine what would have been 'income' into 'carried interest' in a way that appears not to have been intended when the rule was created. If you really want people to respect your profession (I assume you intend to go into finance?) you should focus a little more on the ethics of what you actually do and less on how to spin it.
- 14y ago

credo 14y ago

It is good, but he most certainly isn't unique in this regard and he is late to the game. For several years, Fred Wilson has written that "carried interest" should be taxed as ordinary income. For instance, see http://www.avc.com/a_vc/2010/05/why-taxing-carried-interest-as-ordinary-income-is-good-policy.html http://www.avc.com/a_vc/2010/05/why-taxing-carried-interest-... (and my guess is that Fred Wilson earns more carried-interest-income than Mike Arrington whose biggest payout was probably the sale of TechCrunch.) I'm sure that many other investors (e.g Nick Hanauer, here in Seattle) have the same (or more progressive) positions Btw on some of the other comments ...this fiscal deal wasn't about cutting loopholes. It covered a lot of other more-urgent stuff. There is no way they could have tackled less-urgent stuff in this bill. However, in the past, Obama has called for cutting loopholes and he stressed that point in his speech tonight. Last year, in October, Romney had also stressed the need to cut loopholes. Cutting loopholes is very hard because each loophole has a strong lobby behind it, but I hope the two parties are able to agree on cutting some of these outrageous loopholes.

deleted 14y ago

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deleted 14y ago

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