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Politics : A US National Health Care System?
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To: John Koligman who wrote (2636)11/1/2007 2:39:44 PM
From: TimF  Read Replies (1) of 42652
 
OT

Well in effect part of the gain of the private equity guys is on their own money. They forgo upfront payment and effectively invest that amount in the company. And if need be the operations could make this explicit (giving them shares in the company, rather than a percent of future profit).

OTOH the current tax regime treats ALL of the gain as if it was capital gains. And the equivalent current cost of the shares that would be required in order to make the future percentage of profit, probably should be taxed at the normal income tax rate.

That would cause some of the managers to pay tax when they wind up taking a loss (they would pay tax on their effective fees which become investment, and then the company goes under), but they could deduct those capital glossed from other gains. All around it seems more fair than the current system.

One concern about changing to such a system is that even if it is more fair, and generally reasonable it might reduce investment. If I was certain this was the case, I'd be against the change but I'm not.

If you have strong opinions on this, and it could be a long conversation, perhaps we should move it to another thread. OTOH if its short I don't think most people would mind much.
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