re: The "tax the rich" ideaology.

Yah.

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I understand that, which is why singling out one partner and treating them different

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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

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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.

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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.

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If the proposal is to tax what they are paid as ordinary income, remove the downside risks

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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

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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.

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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.

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Can we do that for any partnership?
It surely would mitigate the stress of running a business.

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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.

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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.

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Good lord.

All good.