Tim, let me explain. An entrepreneur with no money gathers investors, puts in a tiny amount compared to theirs, and gets a “promote” for doing the deal. He pays capital gains twice, first on his actual investment less his basis of cash invested and second on the “promote” share in which he has no basis and therefore on which he pays more tax. David Cay Johnston may be opposed to the capital gains tax, but then is he saying that return on investment should be taxed as income? And that “sweat equity” is not real? Put that into law, and you erase 90 percent of the new business growth in America. This little company, as one example, would have never happened.
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