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Message
re: The "tax the rich" ideaology.
Posted on 6/24/26 at 3:34 pm to the808bass
Posted on 6/24/26 at 3:34 pm to the808bass
Nah.
1
Posted on 6/24/26 at 3:35 pm to Mo Jeaux
Yah.
Posted on 6/24/26 at 3:40 pm to theliontamer
Who else are we supposed to tax?
Posted on 6/24/26 at 4:10 pm to GoCrazyAuburn
quote:If I invest in 2&20 fund, I have been taxed on 100% of the money I invest, presumably at ordinary income rates (37%).
I understand that, which is why singling out one partner and treating them different
The 2&20 manager has not been taxed on any of it.
When I withdraw my money, I am taxed again on profits at Cap Gains rates (23.8% LT). The manager is taxed once on 20% of my ROI, at the same Cap Gains rates.
Now, if he's additionally investing his own money in the proposition as a partner, it likewise has already been taxed. Obviously that money should receive Cap Gains treatment
Posted on 6/24/26 at 4:15 pm to BuckI
quote:Ask the Europeans.
Who else are we supposed to tax?
The money is in the masses. They understand that. Their taxes are uniformly less progressive than are ours.
Posted on 6/24/26 at 4:31 pm to Mo Jeaux
quote:
By the way, the LP market ask for skin in the game also doesn’t have anything to do with carried interest. It because they want to know that the GP is facing the same risks that they are with respect to their capital.
I mean it does though. The only way they are elgibile for the carried interest taxation benefit is by having a parternship interest. That is why the guidelines were put in place to begin with. It is a long rabbit hole to go down as far as the IRS is concerned, but their guidelines and tax court ruling and generally shaped the "best practices" for eligibility. Now, as already mentioned, it is becoming less and less dependent on cash contributions, but the IRS as set rules on what is required for the manager to be considered a GP, and eligible for the tax treatment of a partner, which also comes with additional downside risks that are not shared by your typical account manager. So again, as i've said, if your proposal is to strip the risk based incentives associated with the partnership, you need to also take away the risk downsides. Otherwise, it is a bad proposal.
Posted on 6/24/26 at 4:36 pm to NC_Tigah
quote:
If I invest in 2&20 fund, I have been taxed on 100% of the money I invest, presumably at ordinary income rates (37%).
The 2&20 manager has not been taxed on any of it.
When I withdraw my money, I am taxed again on profits at Cap Gains rates (23.8% LT). The manager is taxed once on 20% of my ROI, at the same Cap Gains rates.
Now, if he's additionally investing his own money in the proposition as a partner, it likewise has already been taxed. Obviously that money should receive Cap Gains treatment
Again, I understand the mechanism. This is by no means the only partnership arrangement where someone can acquire equity positions without a direct cash contribution, and taxed at capital gains rates.
If the proposal is to tax what they are compensated as a partner, as ordinary income, remove the downside risks they face of their position that the other partners do not.
This post was edited on 6/24/26 at 4:43 pm
Posted on 6/24/26 at 4:38 pm to Red Stick Rambler
quote:
Unfortunately this is nothing new
True. It's nothing new.
Unfortunately, the "feed the poor" part was never true.
Their goal is not to feed the poor. The goal is to stick it to the rich.
It's crazy how every year there are more and more "poor" mouths to feed.
Posted on 6/24/26 at 4:41 pm to GoCrazyAuburn
quote:
If the proposal is to tax what they are paid as ordinary income, remove the downside risks
Can we do that for any partnership?
It surely would mitigate the stress of running a business.
The downside risk is the GP underperforms which impacts his de facto bonus. If he goes negative w/o skin in the game, the LP, not the GP, assumes all further risk.
IMO it's often all skin, little grin for LPs
This post was edited on 6/24/26 at 4:45 pm
Posted on 6/24/26 at 4:48 pm to NC_Tigah
If you're not going to tax wealthy corporations than make them pay for their employee's health benefits and stop letting them pass the burden onto the taxpayers.
Posted on 6/24/26 at 4:59 pm to NC_Tigah
quote:
The downside risk is the GP underperforms which impacts his de facto bonus. If he goes negative w/o skin in the game, the LP not the GP assumes the risk.
Incorrect. the LPs are only at risk for contributed capital. The GP is liable for uncapped financial losses for any and all operational debts. GP is also at risk to clawbaks for just underperformance, setup costs, broken deal costs, etc.
However, I did not argue the LP's don't face risks. Their speculative risks are why they are only taxed as LTCG as well. Merely that if you are going to decide to treat the GP's taxation differently than the LP's, it is an unreasonable argument to make without also addressing the risk involved/faced. If they aren't going to get the benefits of being a partner, they do not need to share the risks of one. They have to be considered no different than a general brokerage account manager or something at that point.
quote:
Can we do that for any partnership?
It surely would mitigate the stress of running a business.
This same mechanism is in businesses all the time. It is incredibly common in Partnerships/LLC's. It is just a profit interest equity share in a business. Thsoe can be gained without cash contributions too, and are taxed as capital gains rates when sold.
This post was edited on 6/24/26 at 5:03 pm
Posted on 6/24/26 at 4:59 pm to BuckI
quote:
If you're not going to tax wealthy corporations
Totally different precept.
Corporate tax is as nonprogressive an assessment as there is. It is basically passed through 100% to all consumers, rich and poor. It disadvantages domestic corporations vs foreign competitors, costing Joe-six-pack his job.
This thread doesn't address CT.
Posted on 6/24/26 at 5:00 pm to BuckI
quote:
If you're not going to tax wealthy corporations than make them pay for their employee's health benefits and stop letting them pass the burden onto the taxpayers.
Good lord. Posted on 6/24/26 at 5:06 pm to GoCrazyAuburn
quote:You're right. I honestly had a brain fart. Like forgetting the name of a niece or nephew. Anyway ...
Incorrect. the LPs are only at risk for contributed capital. The GP is liable for uncapped financial losses for any and all operational debts. GP is also at risk to clawbaks for just underperformance, setup costs, broken deal costs, etc.
Posted on 6/24/26 at 5:09 pm to NC_Tigah
All good. 
Posted on 6/24/26 at 5:11 pm to Craig86
quote:
They take loans out of the bank at extremely generous interest rates like 1%, and they can pay 1% on a 30 million loan rather than 37% on that 30 mil.
With what money is the loan paid back?
Posted on 6/24/26 at 5:30 pm to theliontamer
They always want to kill the geese that lay the golden eggs…it’s all the thing Jesus warns about…covet others xxx, greed, etc… you fill in the blank
Posted on 6/24/26 at 5:33 pm to GoCrazyAuburn
quote:
The GP is liable for uncapped financial losses for any and all operational debts. GP is also at risk to clawbaks for just underperformance, setup costs, broken deal costs, etc.
GP clawbacks only apply to the GP’s carry. Setup costs and broken deal costs (and general operational expenses) are fund-level expenses, meaning that they are shared on a pro rata basis among all partners, including the GP. Of course you can have caps on these costs and expenses, but those are negotiated.
Look, I absolutely hear your position, and don’t even disagree per se, but this is an item that keeps getting brought up, and I have the feeling that it will eventually go away. My clients certainly will not be happy about it.
Posted on 6/24/26 at 6:05 pm to Mo Jeaux
quote:
Should we not tax the rich?
bro you just trying to mess up his MoJeaux. Stop it.
Posted on 6/24/26 at 6:15 pm to Mo Jeaux
quote:
Look, I absolutely hear your position, and don’t even disagree per se, but this is an item that keeps getting brought up, and I have the feeling that it will eventually go away. My clients certainly will not be happy about it.
Thats fine. I’m open to other proposals to deal with it. However back to original point, just changing the GP’s tax rate isn’t the route. Eliminate GP’s entirely and funds can hire 3rd party account managers that are compensated via a fee structure, but also only operate in the same capacity and liability of one.
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