

Bobbing as the Taxman Weaves - ojbyrne
http://www.nytimes.com/2010/05/18/business/18sorkin.html

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tptacek
Key grafs:

 _Capital gains have long been taxed at a lower rate than ordinary income
because investors risk their own money when they make their bets._

 _Under their current partnership structure, however, general partners — like
executives at Kohlberg Kravis Roberts or TPG — receive 20 percent of any
profits and they have been treating that as a capital gain even though their
own money is not at risk. A lot of people, including me, have been arguing for
years that their cut of the winnings is really income, not capital gains._

 _(Of course, profits that executives make by investing their own money in the
deals should be considered capital gains.)_

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splat
This seems like a lot of fuss over a negligible amount of money going to the
government. Who knows how many man-hours of highly-skilled labor are going to
be wasted trying to get around these new tax laws? And what does the
government get out of this? "$25 billion over the next decade." That's ~0.07%
of the US Federal budget per year. That doesn't even come close to the amount
that the Office of Budget and Management acknowledges as being "improper
payments" (i.e. fraud, waste, or abuse) of $98 billion.

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tptacek
(a) You can make the same claim about a lot of specific cases in the tax code,
many of which you would _not_ then imply we should just blow off.

(b) You argue that the money is not worth the many man-hours of labor needed
to recover it, but provide no evidence for that. What's the threshold gain
(over enforcement expenses) the government should get to justify imposing or
enforcing a tax?

(c) You note OMB's fraud number, but don't acknowledge that two wrongs don't
make a right, and that the number is therefore not directly relevant to the
discussion.

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noonespecial
The merry little god of unintended consequences is getting ready to once again
laugh his ass off.

