Taxing the Rich Boilerplate

As someone who has a vested interest in the pay rates of investment managers and the tax treatment of that pay, I have paid fairly close attention to the debate over the taxation of carried interest. Much of the argument has focused on two competing views of carried interest: either it's seen as simply another form of direct compensation (thus it should be taxed as income) or it's viewed as a key incentive for private equity (and real estate) investors to put time, energy, and reputation into deals since they will benefit if the deals pan out or lose valuable time, energy, and reputation if the deals fail (thus carried interest should continue to be taxed as capital gains).

I find lots of truth in both viewpoints, and can't find it in my heart or head to choose one over the other. But I don't think it really matters. The argument not being made in this case is whether taxation itself is effective. I really wish we had one prominent conservative out there (in an election year no less!) who would step forward and say, "I don't think we need to raise taxes on carried interest simply because it would only give more money to a bloated government that repeatedly proves its inability to properly allocate funds for the general good. I'd rather savvy investors decide what to do with the capital - their track record is better than Washington's."

Where the hell is that voice?