An Additional Perk of a Private Equity Firm Is That

question 90

True/False

An additional perk of a private equity firm is that the profits for both CEOs and the partners are taxed at the 15% capital gains rate rather than the 35% rate they would suffer if the income was received as income.

---

Definitions:

Average Tax Rate

The ratio of the total amount of taxes paid to the taxpayer's total taxable income, indicating the share of income that is taken as tax.

Marginal Tax Rate

The percentage of tax applied to your income for each additional dollar of income.

Average Tax Rate

The proportion of total income that is paid in taxes, calculated by dividing the total taxes paid by the total income.

Income

Cash inflow, regularly obtained, as compensation for work or earnings from invested capital.