2012 Elections in the USA

[QUOTE=Tiny12; 425020]PERFORMANCE fees magically turn from ordinary income into capital gains with the wave of a politician's wand.

In your post, you fail to note that another reason for foreign funds is because USA tax exempt investors can't invest in domestic hedge and private equity funds. The USA Congress has screwed up the tax code so bad that our pension funds have to invest offshore![/QUOTE]You are still wrong. Performance is participation in the PROFITS. They are not FEES.

The manager gets paid its fees (usually 2-2. 5% of the total FUM, annually) , regardless of performance. That income goes to the management company and is used to pay the management company's bills and for all non-transactional expenses, including paying the people who work there. Usually, the money left over at the end of the year, is distributed to the employees as bonuses. All of that income (to the employees) is taxable at the relevant marginal, income tax rate. End of story. It is not, repeat not, a capital gain.

The carried interest is similar to owning stock, for which the individual did not pay (i.e. the owner has a cost basis of $0). However, the carried interest does not receive any income if the fund does not exceed a predetermined hurdle rate (e.g. an ROI of 10% or something like that). If and when the fund out performs the hurdle rate, the manager gets to keep the carried interest percentage of the profits (above the hurdle rate). That means that the investors get everything up to 10% and on profits above that they split them between the investor and the manager (e.g. 80/20, respectively). If the individual owners of the management company own their carried interests personally, (i.e. Not through a corporate entity) , they can report that income as gains on Schedule D of Form 1040. If they are short-term gains (i.e. made during the first 18 months that the management entity existed) those would be taxed at the normal, marginal income rate. For carried interests held longer than 18 months, they would be taxed at the reduced capital gains tax rate.

While populists and commies the world over like to ***** and moan about hedge fund managers "tax break" on carried interests, that is because most of those people, like yourself, aren't actually familiar with the subject matter. Hedge fund managers are generally entrepreneurs. They start their own businesses, employ people and contribute mightily to the overall US economy. Within 5 miles of where I sit, at this very moment, there are hedge funds with more than $200B in assets under management. They employ thousands of people, here and their transactions requirements provide the opportunities for thousands of other people to be employed, by other firms, in NY, London, Tokyo and so on. When they are successful, the value of the stock of their companies increases (that is what the carried interest is part of), so why shouldn't they, like any other entrepreneur who creates a successful company, reap the benefits of his labor? Bill Gates has taken 99.99999% of his income, over his lifetime, in the form of long-term capital gains. Warren Buffet? Little secret, that is why Buffet pays a lower effective tax rate than his secretary. Another little secret is that the community of hedge fund managers is overwhelmingly liberal, as is the rest of Wall Street and the Democrat hierarchy knows it. I can just image the conversations between Obama and Jamie Diamond "Well, Jamie, we're going to create and exploit class warfare in order to force our socialist utopia on the people. To do that, we are going to make you and all my other non-Hollywood donors, into scapegoats. But don't worry, alongside the socialist utopia, we will have cronie-capitalism and I will allow you guys on Wall St. to have a banking oligarchy."

[QUOTE=SnakeOilSales;425042]You must be joking. (or a fool)[/QUOTE]So, you don't think that Obama, Holder, Axlerod, Geitner and the of the Obama-stapo would access and use confidential, private individual to harm a political rival, in furtherance of his extremist agenda? Mr. Barnum, I've found one over here.

[QUOTE=El Alamo;425034]Wow! Our little pinkie friends are getting worried that the Romney Presidency is in the works. So much for their plans to freeload off productive and hard working citizens. No more welfare checks, food stamps and living free in housing projects. Forget watching soaps 24 hours a day while munching on potato chips. They will actually have to do more than go the mailbox once a week looking for federal assistance. What a shock. Can their delicate little sensitivities withstand the the prospect of getting off their fats asses and finding a job. I doubt it, these fragile little crybabies will probably die of withdrawl from lack of twinkies, oreo cookies, netflix videos and not having 24 hours a day to complain how unjust it is to expect them to contribute something to society[/QUOTE]Our little pinkie friends! You kill me man, first belly laugh of the day with my coffee! Monger on Dude. Toymann

[QUOTE=Dccpa;425038]And if there was anything wrong with an account he previously had at UBS, he would have been contacted by the IRS.[/QUOTE]Our little pinkie friends (LMAO El Alamo) never let intelligence, common sense or the facts get in the way. Monger On Dude. Toymann

[QUOTE=Wild Walleye;425044]All you need to do is look at what is happening to Alderman to know that you are correct. Look, Leonid Obama won his state and US senate seats by leaking sealed court records (a felony, last I checked. Anyone ever investigated for this?). If there was anything within the reach of his jack-booted thugs, it would be on the front page of the NY Times and on MSNBC. Oops, no one reads / watches them, guess it would be on all of the major mainstream media outlets.[/QUOTE]No one reads the New York Times? It is the third largest newspaper in the United States by circulation, and the largest in its category.

[QUOTE=Wild Walleye;425047]So, you don't think that Obama, Holder, Axlerod, Geitner and the of the Obama-stapo would access and use confidential, private individual to harm a political rival, in furtherance of his extremist agenda? Mr. Barnum, I've found one over here.[/QUOTE]Obama's team is far too smart to take the bait and illegally release Romney's tax returns. Strategically, they really do not need to; either Romney is going to release them, which will reveal him as the slimy Wall Street snake that he is, or, he will continue to refuse which will supply the Obama team with a barrage of ammunition to attack Romney that he can do little or nothing to refute. If Romney's tax returns were a sparkling example of transparency, he would have released the returns already so he could re-frame the electoral debate away from his shadiness, something he has clearly been unable to do up until now.

Walleye, You're a smart guy, most of the time. Read your post. It's nonsense, except the part about Warren Buffet. You're jumping through hoops to come up with the logic to call a performance fee a capital gain. You point out that these guys owe their special tax break to the money that they've contributed to liberal politicians.

I struggle with the same principal, in a different industry. I receive special tax breaks from the government, and have defended them because the marginal rate is so high. But the solution is to do what Romney and Ryan are proposing, bring down marginal rates and eliminate the loopholes. I'm surprised you're defending the status quo, business as usual, special interests paying off politicians for favors.

A related point, I can't understand why many think Romney's background is a handicap. If he's going to clean up the system, it's a big advantage. He knows how loopholes work, and he wants to get rid of them. That's apparent from his tax plan. He knows how to fix an enterprise that's bleeding red ink and about to go under, like a company, the Olympics, and hopefully the federal government.

[QUOTE=Tiny12;425053]Walleye, You're a smart guy, most of the time. Read your post. It's nonsense, except the part about Warren Buffet. You're jumping through hoops to come up with the logic to call a performance fee a capital gain. You point out that these guys owe their special tax break to the money that they've contributed to liberal politicians.[/quote]Carried interests are equity participation. In principal, they are no different from stock options or other forms of equity compensation, except that for the guys that start the fund, they are essentially founders' stock.

[quote=]I struggle with the same principal, in a different industry. I receive special tax breaks from the government, and have defended them because the marginal rate is so high. But the solution is to do what Romney and Ryan are proposing, bring down marginal rates and eliminate the loopholes. I'm surprised you're defending the status quo, business as usual, special interests paying off politicians for favors.[/quote]Maybe you could cite some of my posts defending the status quo. I am all for a flat tax. The corporate income tax should be zero, because corporations do not pay taxes. No matter how you slice it. Therefore, corporate taxes are just a means of additional taxation on the individual. Who is already over taxed. Eliminate the corporate tax and you reduce the taxes on individuals, while at the same time enabling US companies to be more competitive on a global basis.

There is nothing status quo about supporting lower taxes on investments and equity participation, in all of its forms.

[quote=]A related point, I can't understand why many think Romney's background is a handicap.[/quote]I don't think that the Veep pick means squat, in the bigger picture. However, what it represents is an opportunity for the media to declare war on yet another member of the Obama opposition and to try to further hamper (beyond what they are already doing) Romney's campaign.

[quote=]If he's going to clean up the system, it's a big advantage. He knows how loopholes work, and he wants to get rid of them. That's apparent from his tax plan. He knows how to fix an enterprise that's bleeding red ink and about to go under, like a company, the Olympics, and hopefully the federal government.[/QUOTE]I'd like to see a veep like Ryan and a sweep of the House and Senate. Then, I'd like to see Romney take a page out of Obama's book and go full throttle with the executive branch and the legislative branch under one roof to gut the federal government. First step would be to eliminate every czar appointed by Clinton, Bush and Obama and dissolve their respective organizations. Then he should pass legislation forcing federal agencies to adhere to the Constitution and to cease and desist in creating new, extra-constitutional legislation (EPA, etc.), repeal Obamacare and every executive order he has enacted. Then, he can start to do the real work that is needed to get us back on the right path. The objective should be to reduce the actual size of government by 20% over the next 10 years.

At the end of the day, whilst standing alone in the voting booth, the American voter will have to do one of two things, vote for true hope and change or close his/her eyes and mind and pull the lever for four more years of misery and the further decline of this great nation.

Staus quo enough for you?

[QUOTE=SnakeOilSales;425051]Obama's team is far too smart to take the bait and illegally release Romney's tax returns.[/quote]You are a joke. Obama and his puppet masters use proxies to do all of their dirty work and they have absolutely no quams about breaking the law. They do it all the time, with absolute impunity. Just look at the clear violation of federal election law whereby the WH, the campaign and the PAC colluded on the "Romney Killed My Wife" ad. The campaign and the PAC shot ads, both starring Joe Soptic on the same day, wearing the same clothes. Keep in mind that Obama and Holder are very likely to have been complicit in more than 300 murders, in Mexico. 2,400 felonies for knowingly shipping illegal arms across international borders (there are no exceptions to the law for the president or for law enforcement) and the deaths of two federal agents. Leaking IRS information is small potatoes. I guarantee you that Axlerod's henchmen have personally reviewed all of Romney's tax returns.

[quote=]Strategically, they really do not need to;[/quote]They can't release 'it' because they didn't find anything to leak. Therefore, they do it all with smears.

[quote=]either Romney is going to release them, which will reveal him as the slimy Wall Street snake that he is, or, he will continue to refuse[/quote]It hasn't worked so far. I'm perfectly happy to have the Obama campaign waste its time and money on things that repulse the American public.

[quote=]which will supply the Obama team with a barrage of ammunition to attack Romney that he can do little or nothing to refute.[/quote]The first truthful, factual thing that you have posted.

[quote=]If Romney's tax returns were a sparkling example of transparency, he would have released the returns already[/quote]OK, Mr. Axlerod. If SOS / MOPD didn't beat his wife, he would have already proven it. Ergo, SOS / MOPD must be a wife-beater.

[quote=]so he could re-frame the electoral debate away from his shadiness,[/quote]Of course, if he would just release the records, Obama, his campaign and the PACs that he illegally controls would drop the only issue his campaign has ever had.

[quote=]something he has clearly been unable to do up until now.[/QUOTE]Run a poll to see who the likely voters think is a bigger scumbag and I suspect that you will see an overwhelming majority who are sickened by what a lowlife Obama is. So much so that many people, who up to this point have been afraid to say anything against Obama, are starting to vocalize their displeasure.

After you post something about a chica (that isn't just regurgitated material from other APers' posts) , we can continue this discussion. Otherwise, time for you to go.

[QUOTE=Toymann;425028]Esten. I will call off the bet. Period. End of story![/QUOTE]Guess the growing realization that the re-election of Obama is becoming more likely every day is disorienting enough for Toymann than to face the prospect of sitting across the table from a triumphant Esten one night next year and then have to pick up the tab.

[QUOTE=Wild Walleye;425055]Otherwise, time for you to go.[/QUOTE]Been overdue for sometime now. The shill should move on and stop deluding himself that anyone, even the liberals on the board (except maybe WT69) , can't see right through him. Been fun watching himself humiliate himself over and over with his rumor mill of deluded posts and fabrications. LMAO. It's been a fun ride. My favourite post (which he edited) was when he inferred that El Jeffe was a "RACIST". That was rich, and then he whinned for a couple days that his posts were being edited or deleted. That was totally rich and provided unending entertainment. Sadly, the enetrtainment value has really dropped off BUT I love the way he paints you and me as the 1%ers. I really appreciate that comment as I came to the US 20 years ago with barely the shirt on my back and now represent his acqusation alrightly. God Bless the American Dream! I know of no other country on earth that provides immigrants with the opportunity to get ahead like the Good Ol'USA. Only sad little pinkies like SnakeBoy howl at the moon and complain over the system they believe has passed them by. Bye Bye snakeBoy. It's been real and it's been great BUT right now it's not REAL GREAT! Monger on all. Toymann

[QUOTE=Wild Walleye;425054]Carried interests are equity participation. In principal, they are no different from stock options or other forms of equity compensation, except that for the guys that start the fund, they are essentially founders' stock.[/QUOTE]For me there is a huge difference between equity participation and founder's stock. The hedge fund founder is not risking capital and the founder of a company is. If the hedge fund manager fails he or she just closes up shop and starts a new fund without any personal loss of capital. I think that the activities involved in running a hedge fund.raising funds, analyzing financial statements, trading and writing reports. Should all be considered as labor same as they are in other businesses. As such I think it should be taxed as income rather than a special category as carried interest. As Tiny says it distorts economic activity. Many of my favorite sell-side analysts at Morgan Stanley left to start there own hedge fund. Suspiciously now you are seeing some of them return.

[QUOTE=SnakeOilSales;425043]There is reason to believe that Romney participated in the IRS amnesty program which resulted in the closure of his UBS account and repatriation of the funds in 2010.[/QUOTE]Again, this administration leaks like a sieve when it is convenient and they have not even insinuated this issue through any of their regular mouthpieces. MR has released his 2010 return. There has been no mention of a 2010 amended return as would have been done in such a situation. So, I am 99. 999999% sure that he was not in the IRS amnesty program. And as opposed to the guy in the commercial, that does mean I am sure.

[QUOTE=Big Boss Man;425061]For me there is a huge difference between equity participation and founder's stock. The hedge fund founder is not risking capital and the founder of a company is. If the hedge fund manager fails he or she just closes up shop and starts a new fund without any personal loss of capital. I think that the activities involved in running a hedge fund.raising funds, analyzing financial statements, trading and writing reports. Should all be considered as labor same as they are in other businesses. As such I think it should be taxed as income rather than a special category as carried interest. As Tiny says it distorts economic activity. Many of my favorite sell-side analysts at Morgan Stanley left to start there own hedge fund. Suspiciously now you are seeing some of them return.[/QUOTE]I don't see a difference between the two. Bill Gates put a lot of sweat equity into Microsoft, but not a lot of money. I think the amount of start up capital was $50, 000. Same for all of my business clients. Each of them may have put their respective ass (ets) on the line for the bank, but they rarely put money into the business. I believe the hedge fund operator's share of profits from customer account earnings should be taxed as earned income and at regular income tax rates. For the profits of any monies they invested themselves, I would tax as unearned income and at capital gains tax rates.

[QUOTE=Toymann;425058]Been overdue for sometime now. The shill should move on and stop deluding himself that anyone, even the liberals on the board (except maybe WT69) , can't see right through him. Been fun watching himself humiliate himself over and over with his rumor mill of deluded posts and fabrications. LMAO. It's been a fun ride. My favourite post (which he edited) was when he inferred that El Jeffe was a "RACIST". That was rich, and then he whinned for a couple days that his posts were being edited or deleted. That was totally rich and provided unending entertainment. Sadly, the enetrtainment value has really dropped off BUT I love the way he paints you and me as the 1%ers. I really appreciate that comment as I came to the US 20 years ago with barely the shirt on my back and now represent his acqusation alrightly. God Bless the American Dream! I know of no other country on earth that provides immigrants with the opportunity to get ahead like the Good Ol'USA. Only sad little pinkies like SnakeBoy howl at the moon and complain over the system they believe has passed them by. Bye Bye snakeBoy. It's been real and it's been great BUT right now it's not REAL GREAT! Monger on all. Toymann[/QUOTE]Toymann, do you have an undiagnosed case of Aspergers Syndrome?