UPDATED BELOW

Percy is the world's foremost authority on the proper tax treatment of carried interest.  He believes that carried interest should be taxed the same as the gains or income from which it is derived. Click here for all of his carried interest posts.

I am grateful for Congressman Pat Tiberi's skepticism over the wisdom of increasing taxes on the carried interest of fund managers.  I must, however, express my disapproval over the arguments he musters to justify his skepticism.  I'm particularly alarmed by gaseous sentimentality like this (from yesterday's Newark (Ohio) Advocate):

The carried interest tax proposal is complicated. It could have wide-ranging effects, not just to the people in air-conditioned, steel-and-metal skyscrapers, but to a hard-working mom looking forward to her retirement, to the little boy who hopes one day his neighborhood will be safe enough for his parents to let him ride his bike to the playground, or to the researcher who might be on the verge of discovering a new cancer treatment.

Please, let's leave the gaseous sentimentality to the private equity haters.  We need to stay focused: finance entrepreneurs, like all other types of entrepreneurs, take equity of little value on the front end.  Through a combination of hard work and capital at risk, the value of our equity may increase in value.  Why should we pay taxes on those increases at higher rates than other entrepreneurs?

UPDATE:  After posting this blog entry, I found Congressman John Linder expressing a similar view.  From today's Bloomberg:

"The principal sin in politics is overreaching," said Representative John Linder, a Georgia Republican who serves on the tax-writing House Ways and Means Committee and is undecided on the issue. "When they start talking about women and children, they're overreaching."