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2016 Postmortem
Related: About this forumWhy Mitt can't escape Bain. DU Bonus - the Carlyle Group!
Last edited Fri Jan 13, 2012, 04:54 PM - Edit history (3)
Put aside Raids Layoffs and Lies for a moment
there's one big, final piece missing -
IT'S TAXATION
Mitt can't explain how he made his money without Bain, but Bain explains his tax returns, and his nice tax rates.
The CS Monitor finally brought the Private Equity Scam home to me
DU's favorite private equity outfit, Carlyle, more famous for deaths than layoffs, is going public. That means they have to disclose statutory information, the sort of Information that would sink Mitt and more than a few other Republicans
What Carlyle and Bain Capital can teach us about taxes
Carlyle disclosed its executive compensation in some detail, providing a rare glimpse into how investment firm managers are paid. Combined with the Bain flap, it will surely reopen the five-year old debate over the special tax treatment these partnerships receive through a mechanism known as carried interest or, in short, the carry.
The carry allows general partners in investment deals to receive compensation in the form of tax-advantaged capital gains, which are taxed at 15 percent, rather than as salary, which would be taxed as ordinary income with a top rate of 35 percent. This happens because the managers are paid with a fee (up to 2 percent) plus 20 percent or more of their investors profits. Those profits are taxed as capital gains even though the general partners may have little or no money of their own at risk in the deal.
Carlyles disclosure opens a small window into how this works. In 2011, its three founders were each paid about $140 million. But they received just $275,000 in salary and another $3.5 million in the form of a bonus (also taxable at ordinary income rates). But each also got $134 millionor 96 percent of their compensationfrom investment profits. Much came from the carry and is taxable at 15 percent
.http://www.csmonitor.com/Business/Tax-VOX/2012/0113/What-Carlyle-and-Bain-Capital-can-teach-us-about-taxes.
Carlyle disclosed its executive compensation in some detail, providing a rare glimpse into how investment firm managers are paid. Combined with the Bain flap, it will surely reopen the five-year old debate over the special tax treatment these partnerships receive through a mechanism known as carried interest or, in short, the carry.
The carry allows general partners in investment deals to receive compensation in the form of tax-advantaged capital gains, which are taxed at 15 percent, rather than as salary, which would be taxed as ordinary income with a top rate of 35 percent. This happens because the managers are paid with a fee (up to 2 percent) plus 20 percent or more of their investors profits. Those profits are taxed as capital gains even though the general partners may have little or no money of their own at risk in the deal.
Carlyles disclosure opens a small window into how this works. In 2011, its three founders were each paid about $140 million. But they received just $275,000 in salary and another $3.5 million in the form of a bonus (also taxable at ordinary income rates). But each also got $134 millionor 96 percent of their compensationfrom investment profits. Much came from the carry and is taxable at 15 percent
$130 million a year, paying tax rates less than their Secretaries? Yep that would be the 2011 SOTU address. The GOP proposal to abolish capital gain tax would allow Private Equity partners to pay virtually no tax at all.
You can see why Mitt is the perfect candidate for the Obama Campaign. Unlike a caged dog they will not let it go, demanding that Mitt open the books, and show us his taxes. Legalistic replies about blind trusts and confidentiality clauses wont cut it, but allegations that he owns sweatshops in China certainly will. If he says he doesn't own them it his blows his cover- show us the books. If he says he knows nothing about it, then what exactly does he know about business and his businesses. It's a dog chasing it's tail, going round and round.
Bain will dog Mitt Romney to the end of his run, whenever that is.
Who let the dogs out - Who? who?
Ask Carlyle for starters.
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