Paul L. Caron

Monday, July 25, 2016

Vic Fleischer—'The Closest Thing The Tax World Has To A Rock Star'—Goes To Washington

Fleischer (2016)Following up on Friday's post, Vic Fleischer Named Co-Chief Tax Counsel For Democrats On Senate Finance Committee:  Bloomberg, Mr. Higher-Tax-on-Carried-Interest Goes to Washington, by Lynnley Browning:

He made his name in academia by criticizing a lucrative tax break for private-equity managers. Now Victor Fleischer is taking his anti-loophole thinking to Washington.

Fleischer will serve as a formal adviser to Democrats on the powerful Senate Finance Committee, a perch from which he says he’ll seek ways to close the so-called “carried interest” loophole -- and to curb other tax benefits.

Fleischer’s appointment is the clearest sign yet that some members of Congress want to eliminate the carried-interest break and tax private-equity managers’ income at ordinary rates. It also signals that congressional pushes for a tax overhaul will seek curbs on other special tax advantages as well.

“I will be working on carried interest, but that’s not the only thing, of course,” Fleischer, a professor of corporate tax law at the University of San Diego, said in a telephone interview. “It’s obviously going to go beyond private equity.”

His influence could grow considerably if Democrats win the majority in the Senate in November. Senator Ron Wyden, the Oregon Democrat who hired Fleischer, would take over as the finance panel’s chairman, replacing Republican Senator Orrin Hatch of Utah. ...

Once an obscure academic, Fleischer rose to prominence shortly after he published a now-seminal paper in 2008 that criticized the preferential tax treatment of the profits. Written while he was an untenured professor at the University of Illinois School of Law, the paper, Two and Twenty: Taxing Partnership Profits in Private Equity Funds, [83 N.Y.U. L. Rev. 1 (2008)] is now the most-read work on the subject, according to the Social Science Research Network, the leading scholarly website for academic papers. ...

A native of Buffalo, New York, Fleischer, 44, may be the closest thing the tax world has to a rock star. He writes the weekly Standard Deduction column for The New York Times, in which he has called for universities to spend at least 8 percent of their endowments each year and for the IRS to crack down on real-estate investment trusts that operate prisons, casinos and data storage centers while getting preferential tax treatment available to real-estate income. “I won’t be continuing the column,” he said. ...

Lindsey Held, a spokeswoman for Wyden and the finance panel, declined to specify what issues Fleischer will be working on. He’ll be a co-chief tax counsel to the committee’s Democrats, working in tandem with a current staff member, Tiffany Smith. “International competition is our overarching goal,” Held said. Hiring Fleischer signals Wyden’s effort to bring “external vision” to a tax overhaul, she said.

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What about Paul Caron?

Posted by: mike livingston | Jul 25, 2016 4:09:27 AM

Pfft, the potential revenue from carried interests doesn't even begin to move the needle. For this, we're gonna screw up decades of precedent on profits interests?

Posted by: Dale Spradling | Jul 25, 2016 5:51:19 AM

I can see both sides of the carried interest argument, but on balance favor ordinary income treatment as a policy matter. That said, Dale is right. The obsession with this issue has nothing to do with fiscal responsibility, but only with envy.

Posted by: Mike Petrik | Jul 25, 2016 9:00:38 AM

Congrats, Vic!

Posted by: Jack Manhire | Jul 25, 2016 9:01:33 PM