The Medieval Geniuses Who Invented Carried Interest and the Modern Barbarians Who Want to Tax It

The proposal would kill investment, and with it, tech.

by Drew Armstrong
March 20, 2017

It’s no secret that both Donald Trump and Hillary Clinton fail to understand that taxation is theft. Neither was even willing to retain the few laudable provisions that exist in the tax code. Instead, they used class warfare to condemn what is commonly referred to as “carried interest.”

Carried interest allows the investment manager of a fund or partnership to be compensated with the profits of the funds. The proceeds are taxed as capital gains rather than income.

Despite the heated rhetoric, the provision of law is based on a historical parallel that dates back to the Middle Ages. A look back into history shows how carried interest was created and why it is a vital component of a thriving society.

Merchants Fuel Long-Distance Trade

Think back to Venice, Italy in the year 1036. Due to the geographic location and numerous beneficial alliances, Venice began to grow wealthy as an international center of trade. Up to that point, the Venetian head of state, or Do…