From the FT’s zeitgeist-ridden editorial today:
“While much of Barack Obama’s rhetoric against private equity has the flavour of electoral pantomime, he is on firmer ground when he seeks to change the basis on which carried interest is taxed. There can be no justification for it being treated on the same basis as capital gains, rather than as income.
True, technically speaking, these profits are capital gains in that they arise from a capital investment. But as they are mainly gains on others’ capital, which private equity partners only receive by virtue of the jobs that they do, this is to all intents and purposes a payment for their services. As such, it should be taxed as income.”
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