[FoRK] Short version was Re: Limeys can't comprehend US tax law? ; -)

[Jeff Bone]

Partnership income stemming from investment doesn't magically all  
convert to long term capital gains simply by flowing through the  
partnership.  Those who are making such an issue about this are either  
arguing from principle that *no* flow-through income should be taxed  
at less than the ordinary income rate, or they simply don't understand  
the breakdown between longer-term and shorter-term trading in most of  
these shops.  And for those that are outraged, they're completely  
missing the point that beyond a surprisingly-low threshold of such  
income with a typical mix of tenors, the blended tax rate  
asymptotically approaches the max and the portion taxed at the lowest  
rate approaches epsilon.  And this is, remarkably, BY DESIGN;  this  
feature of the tax code, among other things, is intended to discourage  
short-term speculation!  Amazing!

Buffett is an aberration on *many* dimensions, I don't really think  
his situation should be the model for tax policy decisions.

Now per se venture capitalists, that's a completely different story.   
I'm all for taxing them until their eyeballs bleed and they cry for  
mommy. ;-)

jb