New column: Blackstone's taxing IPO

okay, can you explain this to me...

"Ramping up taxes on these guys could lead to unpleasant consequences: think about the next Google going unfunded because money was diverted to pay taxes. "

correct me if I'm wrong here, but if Google is giving its executives money, how that executive is taxed has no impact on Google's bottom line.

and then there is this....
"On the positive side, the lower rate brings more risky, productive investments. On the negative, it prompts more unproductive accounting games. "

um, shouldn't risky, UNPRODUCTIVE investments be included as a significant negative here? I mean, unless you think that "risky" doesn't mean "risky" -- that someone all start-up companies and hedge funds created through venture capital wind up succeeding -- there is a downside to risky investments in addition to "accounting gains".

Its like Bear-Stearns DIDN'T happen last week, almost...

It seems to me that a good way to deal with taxes and encouraging capital investment without "under-taxing" the rich (the kind of people who make these investments) would be to treat funds in capital investments the way we do the capital we have in our houses - roll it over and it gets favorable tax treatment, but the cash from investments that winds up in your pocket is income and taxed as such.

"It seems to me that a good way to deal with taxes and encouraging capital investment without "under-taxing" the rich (the kind of people who make these investments) would be to treat funds in capital investments the way we do the capital we have in our houses - roll it over and it gets favorable tax treatment, "

You can only do this once --- at least until you retire, and then you have to have lived in the house (IIRC) for at least three years.

Paul, my comment on Google was really short-hand, and probably not very good short-hand, for this argument: If the carried interest of venture capital and private equity partners were taxed at a higher rate, you would expect to see marginally less VC and PE work getting done. VC Fred Wilson has argued that the most successful VCs would simply shut out outside investors and invest their own money, which would mean much smaller VC funds. I don't really buy any of this, but who knows.

As for the whole "risky investments" thing: It's risky investments that make the economy grow, and it's pretty hard to separate out the productive from the unproductive ones. Although I guess we attempt to do that by taxing long-term capital gains at a lower rate than short-term ones.

Justin, it seems to me that your argument comes down to a policy of further concentration of wealth (with fewer jobs, and fewer good paying jobs) in the US in order to ensure that the superrich have enough money that they are willing to risk losing it in high-risk ventures that "create jobs."

But I see no evidence that suggests that these "created jobs" make up for the damage done to the average American through the concentration of wealth.

I mean, look at your own employer -- laying off people at Time, while insisting that everyone produce more content with little regard for "quality control" of that content -- look at how Klein's latest piece in the dead tree Time uses the term "al Qaeda" without ANY reference to the fact that the "al Qaeda" he is referring to (al Qaeda in Mesopotamia) is virtually unrelated to the people who attacked us on 9-11.... or letting you publish what you acknowledge was "not very good shorthand" for an argument that you "really don't buy."

How many jobs could have been saved were the owners of Time not paying off the debt service for their various acquisitions? Is Time really operating "more efficiently" now, or is it just increasing production by sacrificing quality?

I'll get off my soapbox now... ;)

"[R]idiculous NRO column" is mostly redundant. If you add the qualifier that the column is by Kudlow, you drop "mostly" from my comment.

Re "VC Fred Wilson has argued that the most successful VCs would simply shut out outside investors and invest their own money, which would mean much smaller VC funds. I don't really buy any of this, but who knows."

I don't really buy that either. If, say, the Chinese sovereign wealth fund wants to put a billion dollars in some fund, they will find a way to take it. The tax situation only matters on the margin.

Plus I don't think there is a particular shortage of VC capital anyway. Or there will be for the forseeable future.

Yeah, if only we had higher capital gains taxes, I'd write better columns.

When we get to the topic of taxes, the folks on the right are a broken record: "We should cut taxes!"
My question is, "What is the right amount of taxation?" For surely you agree, the money for funding the government has to come from somewhere. You are that much in reality, correct?
Kudlow says that "supply side" economics is sweeping Europe while the Democrats want to raise taxes here. A look at the corporate tax rates, even after they are cut in Europe and the corporate tax rates here will show that the rates here would still be lower.
My point is, there is a 'correct' amount of taxation. Shouldn't we be determining what that amount is? And, with the acceleration of the concentration of wealth in this country in the past 6 years, shouldn't we be getting that tax money from the people who have benefited the most (I am not even suggesting that they bought legislation) from the policies over this same time. Wouldn't that be fair? I know it would be prudent!
rh