Discuss whether or not the tax rates applicable to private equity firms should be changed?

Expert Solution

Private equity has become one of the most efficient ways to move capital.It helps to influence or control company without worrying about any movement in the prices of the stock.It is only for the weathiest of investors because it requires huge contributions.Private equity is framed as limited partnership which is one of the best feature of corporation.They acts as a artificial person which means their investors enjoy more incentive in this form of incorporation of company.Limited partnerships are taxed at modest rates infact they aren't taxed at all and the profit earned by them is pass over to their partners.Incomes are taxed at capital gain rates as opposed to higher income tax rates.Such firms pays dividend,decree it to be management fees and then classify as non taxable business expense.

So in my opinion tax rates applicable to private equity fund should be increased so that fair taxation can be done.

jeff jeffy answered 5 months ago

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