Taxation of Carried Interest
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Taxation of Carried Interest
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Re: Taxation of Carried Interest
#2Taxation of carried interest as capital gains makes absolutely no sense - I can't think of a better example really to illustrate "one set of rules for the rich and another for everyone else.'
Re: Taxation of Carried Interest
#3Counterpoint from Matt Ocko (DCVC):
https://twitter.com/mattocko/status/1005367508910596096
1/ TL; dr: “Having gotten immensely rich in part due to a tax break, I now solemnly opine that it should be denied to others... with no consequence to me...”
This is “pulling up the rope ladder behavior” - here’s why:
2/ Fred’s stance screws over underrepresented VCs the most...
They are most likely to have smaller funds that - when they win (& I hope they do) - they have big carry events. They are then disproportionately taxed vs old white dudes living on big fees w/ cunning tax structures;
3/ and, every dollar coerced by the state from emerging women & PoC VCs for largely noise-level financial impact (vs killing Prop 13) and only really for political posturing means less $ to anchor their next fund’s GP commit, putting them at a fundraising disadvantage; and...
4/ ...smaller funds mean smaller mgmt fee, fewer women and PoC hired by those funds, and less reward for everyone from the partners on down - where a carry centric bonus/win for an associate might be hugely meaningful for their family.
Re: Taxation of Carried Interest
#4Counterpoint from Matt Ocko (DCVC): https://twitter.com/mattocko/status/1005367508910596096 1/ TL; dr: “Having gotten immensely rich in part due to a tax break, I now solemnly opine that it should be denied to others... with no consequence to me...” This is “pulling up the rope ladder behavior” - here’s why: 2/ Fred’s stance screws over underrepresented VCs the most... They are most likely to have smaller funds that…
This isn't a tl;dr, you're pasting the entire contents of someone else's twitter thread into an HN discussion. That's confusing and generally not good since it's not your comment and that person is presumably not here to participate in the conversation.
Re: Taxation of Carried Interest
#5Counterpoint from Matt Ocko (DCVC): https://twitter.com/mattocko/status/1005367508910596096 1/ TL; dr: “Having gotten immensely rich in part due to a tax break, I now solemnly opine that it should be denied to others... with no consequence to me...” This is “pulling up the rope ladder behavior” - here’s why: 2/ Fred’s stance screws over underrepresented VCs the most... They are most likely to have smaller funds that…
I'm not sure why Ocko is bringing women & PoC into the debate when they remain a very small minority of VC GPs. The minority is even smaller when you weight by AUM (and likely future gains) vs just counting the number of people.
The fact is that a change to how carried interest was taxes would, by far, mostly affect older white dudes.
I'll for hearing a legitimate counterpoint but this one strikes me as a fairly cynical manipulation.
Re: Taxation of Carried Interest
#6Counterpoint from Matt Ocko (DCVC): https://twitter.com/mattocko/status/1005367508910596096 1/ TL; dr: “Having gotten immensely rich in part due to a tax break, I now solemnly opine that it should be denied to others... with no consequence to me...” This is “pulling up the rope ladder behavior” - here’s why: 2/ Fred’s stance screws over underrepresented VCs the most... They are most likely to have smaller funds that…
I'm not sure why Ocko is bringing women & PoC into the debate when they remain a very small minority of VC GPs. The minority is even smaller when you weight by AUM (and likely future gains) vs just counting the number of people. The fact is that a change to how carried interest was taxes would, by far, mostly affect older white dudes. I'll for hearing a legitimate counterpoint but this one strikes me as a fairly cyni…
Right. Someone is going to miss out when you fix a loophole. You should still fix the loophole.
Re: Taxation of Carried Interest
#7FWIW, here is the simple counter argument:
Alice & Bob form a partnership to invest some money. Between the two of them they invest $100. After 5 years they sell their investment for $200. As far as the government is concerned, that's a long term gain of $100 and should be taxed as such. How Alice & Bob decide to split the gains is between them and not a tax question.
I don't necessarily buy this argument, but it's a valid way to look at things.
Re: Taxation of Carried Interest
#8Counterpoint from Matt Ocko (DCVC): https://twitter.com/mattocko/status/1005367508910596096 1/ TL; dr: “Having gotten immensely rich in part due to a tax break, I now solemnly opine that it should be denied to others... with no consequence to me...” This is “pulling up the rope ladder behavior” - here’s why: 2/ Fred’s stance screws over underrepresented VCs the most... They are most likely to have smaller funds that…
I'm not sure why Ocko is bringing women & PoC into the debate when they remain a very small minority of VC GPs. The minority is even smaller when you weight by AUM (and likely future gains) vs just counting the number of people. The fact is that a change to how carried interest was taxes would, by far, mostly affect older white dudes. I'll for hearing a legitimate counterpoint but this one strikes me as a fairly cyni…
> I'm not sure why Ocko is bringing women & PoC into the debate
It's this generation's "think of the children!" Just like Prop 13 was passed via "think of grandma losing her house!"
Re: Taxation of Carried Interest
#9Counterpoint from Matt Ocko (DCVC): https://twitter.com/mattocko/status/1005367508910596096 1/ TL; dr: “Having gotten immensely rich in part due to a tax break, I now solemnly opine that it should be denied to others... with no consequence to me...” This is “pulling up the rope ladder behavior” - here’s why: 2/ Fred’s stance screws over underrepresented VCs the most... They are most likely to have smaller funds that…
LOL. Suddenly a VC cares a lot about minorities.
Re: Taxation of Carried Interest
#10FWIW, here is the simple counter argument: Alice & Bob form a partnership to invest some money. Between the two of them they invest $100. After 5 years they sell their investment for $200. As far as the government is concerned, that's a long term gain of $100 and should be taxed as such. How Alice & Bob decide to split the gains is between them and not a tax question. I don't necessarily buy this argument, but it's a…
> I don't necessarily buy this argument
Why should risking time and risking money get taxed at different rates? I guess I don't understand the argument for why LPs should pay less taxes than GPs. Especially since entrepreneurs get to pay longterm capital gains on their stock, and the risk profile of being a founder is basically identical to the risk profile of being a GP.