http://www.hillaryclinton.com/news/release/view/?id=2396
The "Don't get me wrong..." line can be read as "Please don't cancel your fundraiser, Mr. Rattner"...
Seriously, though, I am surprised by the speed with which a consensus has emerged on this. Some of that is probably due to the relative incompetence/naivete with which the industry has approached the political process. (Sending Mr. Kravis up to the Hill is not having the intended effect...)
An underlying factor may be the weakening of the alliance between high finance and the Republican party. The PE industry doesn't have friends in Republican party like they used to.
What's amazing is that a cursory review of Mitt.com reveals no effort from the Republican party's official spokesman for this guy (and him, and him) to defend the current tax policy. I remember a time (*sniff*) when the 'publicans would be crawling all over one another for a shot at declaring Democrats as "for a Tax Increase" - but not a peep from The Haircut. Or the Non-Haircut either.
All of that having been said, I still don't think it becomes law. I suppose I could see it passing the Congress, being vetoed and failing to make the 2/3 - but even that seems unlikely. For one thing, Chuck has already made his concerns clear. And there are a lot of Democrats who will do fundraisers in the PE and IM industry as election day approaches, and too many ways for the Senate to scuttle it. (Btw: Committee Chairman Dodd has been surprisingly quiet on the issue...thankfully, Chairman Baucus looks forward to a spirited discussion...)
But the industry's relatively weak PR skills, and the de minimus $ at stake (HC says $4-$6 billion, or .2% of federal spending) makes it an ideal summer punching bag for presidential candidates...
ps - The title was not intended to drive traffic from those seeking more prurient HRC stories...but I'll take it!
Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts
Friday, July 13, 2007
"Steve, you aren't making the job of our lobbyists any easier..."
http://dealbook.blogs.nytimes.com/2007/07/13/tax-loopholes-sweeten-a-deal-for-blackstone/
This is part of why I've taken to advising Mrs. Blunt to relax about the so-called "threat" to carried interest posed by the proposed change in tax law. As we speak, these guys (and these, and these) are I'm sure thinking up ways to avoid the hit.
Conceptually (and this is a good time for the disclaimer) you could structure your partnership agreement with tiered equity, in which general partners (& staff) put up some capital and in return receive a share of the carry. It would appear to be capital gains, as financial capital is at risk. For instance, a mild-mannered young associate could put up $1000 (held in escrow? loaned to her by the firm?), and should the firm lose capital, she would lose the stake. But when carried interest is distributed to the firm's partners and staff, the ratio of return for that $1000 could be far in excess of that offered to limited partners. This is just one idea, but it essentially reflects the tax treatment of options (partnership shares would function a bit like Incentive Stock Options in that case).
This is part of why I've taken to advising Mrs. Blunt to relax about the so-called "threat" to carried interest posed by the proposed change in tax law. As we speak, these guys (and these, and these) are I'm sure thinking up ways to avoid the hit.
Conceptually (and this is a good time for the disclaimer) you could structure your partnership agreement with tiered equity, in which general partners (& staff) put up some capital and in return receive a share of the carry. It would appear to be capital gains, as financial capital is at risk. For instance, a mild-mannered young associate could put up $1000 (held in escrow? loaned to her by the firm?), and should the firm lose capital, she would lose the stake. But when carried interest is distributed to the firm's partners and staff, the ratio of return for that $1000 could be far in excess of that offered to limited partners. This is just one idea, but it essentially reflects the tax treatment of options (partnership shares would function a bit like Incentive Stock Options in that case).
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