Published: Jun 24th, 2010

carried interest filibustered again

The cloture motion failed 57-41.

The carried interest legislation will be back, and I’d guess sooner rather than later. Revenue offsets are hard to find, and this one is good tax policy.

I was disappointed by Senator Snowe’s speech about payroll taxes on S Corp shareholders. As with carried interest, the issue is the improper conversion of higher-taxed labor income into low-taxed investment income. Under current law, the amount of compensation that S Corp shareholders pay themselves is respected so long as it is reasonable. The whole point of that portion of the bill is that the “reasonable compensation” standard doesn’t work well at all. If we want to subsidize small business, there are more efficient ways of doing so than by allowing rampant evasion of payroll taxes on labor income by S Corp shareholders.

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“the intellectual godfather of private equity tax hikes” – Dealbreaker

I currently teach Deals, Corporate Tax, and Partnership Tax. I have also taught Federal Income Tax, Tax Policy, Venture Capital & Private Equity, and various seminars.

I joined the faculty of the University of Colorado in 2006. I have also taught at UCLA, Georgetown, Illinois, and Columbia. In the Fall of 2010, I will be a visiting professor at the NYU School of Law.

In 2007, a draft version of my paper on carried interest helped prompt Congress to propose Section 710 of the tax code, which would tax a portion of carried interest as ordinary income rather than capital gain. The paper, Two and Twenty: Taxing Partnership Profits in Private Equity Funds, was later published in the NYU Law Review. My research generally focuses on tax policy, investment funds, and entrepreneurship.

This summer, I am working on papers analyzing the tax treatment of founders' stock and entrepreneurship under an income tax and consumption tax.

A Taxing Blog

Victor Fleischer — Associate Professor of Law, University of Colorado.

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carried interest filibustered again

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