Quote:
Originally Posted by scottw
And the investors are often pension funds that don’t have to pay tax no matter how much ordinary income they’re given.
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You should have put this line in bold as it's the most important one in the entire piece.
So Justplgit's pension gives me 100 dollars to invest, I turn it into 120 dollars through my market savvy, give him his 100 dollars back + some interest we already agreed to. I keep the rest, but since it's all profit it's treated as capital gains...Justplugit's pension pays nothing as pension funds are exempt from taxes.
Now I would think you could argue that the beneficiaries of the pension funds are also getting a tax break...and they are.
I also understand that when you add it all up it doesn't fix the tax revenue problem, and that to change the tax code just a narrow part of the population doesn't make a lot of sense.
But if not technically a loophole it sure does sound like some hedge fund and private equity managers are able to get out of paying A LOT of taxes on what is really income when they whip out the cash for that new Porsche...all for taking risks with other people's money.
-spence