VCs Cry Boo-Hoo, Refuse to Pay Income Tax

As Adam Lashinsky reports, a collective whine is rising from comfy VC offices as Congress contemplates the possibility of--horrors--making venture capitalists live by the same tax code as everyone else.

The issue?  Thanks to the mountains of money private-equity firms have made in recent years, the industry has been attracting scrutiny, and someone noticed that private-equity firms, VC firms, and other "alternative" investment entities have for years enjoyed a sweetheart tax deal: The firms' performance-based fees (often 20% of profits) are taxed at long-term capital gains rates rather than ordinary income rates.  The logic behind this treatment is flimsy at best, but it was probably made possible by the genius who labeled such fees a "carry" instead of "fees."

In any case, Congress is now considering making VC and PE firms pay regular old income taxes, a move that makes perfect sense to everyone except the VCs.  The VCs, meanwhile, are trying several tactics to preserve their dream rates, including hiring lobbyists, making unctuous arguments that--unlike bloodsucking PE firms--they develop businesses and create jobs (so do working stiffs), and declaring that their performance-based fees are actually capital gains.  Some VCs have even suggested that, if the tax-treatment is changed, the economy will suffer and they'll quit the business.  (This last sentiment is particularly absurd: What are they going to do when they quit--go work in other, less-interesting, lower-paid businesses where people already pay income taxes?)

According to Adam, the VCs make two basic arguments about why their fees are actually capital gains:

1. The fees take a long time to earn.
2. The fees are performance-based.

Well, so what.  Incentive comp is still comp.  In the real tax world, meanwhile, it doesn't matter whether you provide your services for one day or ten years.  A contractor who gets a lump-sum payment after a decade-long construction project pays income taxes, not capital gains.  Employees who exercise and sell incentive stock options pay income taxes, no matter how long they've held the options.  Etc.

The one argument not made about the tax treatment is the only one that would be valid: That VCs actually put their capital at risk.  VCs don't put their capital at risk--they get paid to put other people's capital at risk.  (A new law would presumably not affect the tax treatment of capital that partners have invested in their own funds--which would be capital gains).

VCs have enjoyed favorable tax rates for years, and no one can blame them for hoping the gravy train will continue.  There's a difference between quietly hoping and making embarrassing, self-serving arguments, however--especially when VCs can lock in great tax rates forever just by investing in their own funds.

Comments

[hzygzs]

Thanks a lot. keep it up.

___________________________________
TV studio film lighting -HD video camera battery -HD LCD monitor

[sohbet]

thanks admin good post

sohbet-askalemi
-knuddels

[ugurss]

thanks admin good post
Temizlik şirketleri Temizlik şirketleri Sohbet Sohbet odaları

[www.facebook.com/profile.php?id=640520303]

thanks for all admin
information is the most beautiful treasures
porno izle

[www.facebook.com/profile.php?id=640520303]

thanks for all admin
information is the most beautiful treasures
sikiş

[www.facebook.com/profile.php?id=640520303]

thanks for all admin
Are you really cool
porno video

[www.facebook.com/profile.php?id=640520303]

thanks for all admin
Are you really cool
porno tube

[www.facebook.com/profile.php?id=640520303]

thanks admin
information is the most beautiful treasures
3d oyunlar

[www.facebook.com/profile.php?id=640520303]

thanks admin
information is the most beautiful treasures
sex video

[www.facebook.com/profile.php?id=640520303]

thanks admin
Are you really cool,owe you gratitude..
tarsus

[www.facebook.com/profile.php?id=640520303]

thanks admin exciting blog
information is the most beautiful treasures
sikiş

[www.facebook.com/profile.php?id=640520303]

thanks you
You will have to crawl very nice,owe you gratitude..
partner

[Ugurkiper]

thanks you
You will have to crawl very nice,owe you gratitude..
Temizlik şirketleri
Temizlik şirketleri
Temizlik firmaları
Temizlik firması

[www.facebook.com/profile.php?id=640520303]

thanks you
You will have to crawl very nice,owe you gratitude..
sikiş

[jimb12345]

You definitely have to pay for your taxes. I am not sure what they are thinking. This is not correct.
asbestos lawyers san diego

[damned]

Australia Tel: (61 2) 9223 1116 or 9232 7000 Fax: (61 2) 9221 5628 or 9232 3355 c.barisik@aca.nsw.edu.au www.aca.nsw.edu.au
The fact that peace-lovers cannot stop a war should not be held against them. Those who are determined to kill, rape, maim and plunder will find a way to do so, somewhere, some time, somehow. [Their] beliefs, thoughts and feelings are as real and valid as yours, mine or anyone else's. You cannot güzel sözler -
aşk sözleri -
Msn Sözleri -

[Evnakli]

daha söyleyecek çok söz ama çok güzel makaleler var ilginç yazılar saygılar.
evden eve nakliyat evden eve nakliye
evden eve nakliyat evden eve nakliyat

[webqes]

simdi sıralayalım hemen sikiş hemen yanında porn hemen sonrasında sex ve son olarak sex arkasından sex izle ve biter

[asicocuq]

google seo danışmanlığını araştırarak daha düzeyli siteler yapabiliriz.bunun için seoyu iyi bilmek gerekir.seo ve optimizasyonu ne kadar iyi bilirsen o kadar yararına olacaktır.
Bizim buradaki amacımız sexfilmiseyretmenizi sağlamak ve bu siteye girmenizi istemek.gereğini sizlere bırakıyorum.

[Algevis]

I am happy to find this very useful for me, as it contains lot of information. I always prefer to read the quality content
Estetik

[Mircchats]

thanks admins

bayan forumları vizyona girecek filmler yeni çıkan klipler günlük gazeteler chat

[Isabella Das]

We use our knowledge of contractor mortgages and the lenders to bring you the best contractor mortgage deals on the market.

contractor mortgages