Maggie's Farm

As I am, apparently, turning into an omni-opposition researcher, I ran across the capital gains tax problem for venture capitalists who manage other folks funds. I really, and for true, did not want to learn about the intricacies of that part of tax code, but as one candidate has a strong vc background, it has become necessary.

I did, indeed, finally figure it out enough to understand it, which is not that well but better than nothing, and then I had to shake my head. Our system is not only nuts, but contradictory in this area. Funds that are invested in more than one company or other vehicle are treated, by part, for capital gains. Thus a positive return in any single part is taxed at that rate (15%), and even if the rest of the fund loses money (so that an individual manager has to hand their gains back to the fund) they are still liable to the tax on the parts that made money even if the fund broke even or lost money.

Not only can you not see a return on your investment, but you can be taxed on it because of the parts that did well. If this were treated as 'ordinary income' then it would be against the fund, as a whole, not the parts... and that one candidate coming from this arena (which has been a specialty of his for more than a decade) mis-states it. If you want to show your chops as an executive of vc funds, then one had best demonstrate that by actually knowing the situation and *stating it clearly*. It is a damned complex area of the law, made so by lawmakers... and if that candidate can't clearly state it and then denounce the complexities of the thing, then I have serious doubts of what, exactly, he will do in taxation vetos and proposals while in office.

Really just exasperated with this field of candidates.