Obama Expected To Kill Hedge Fund Tax Break

[Pirate Smile]

Source: Huffington Post

If there is one tax loophole that looks dead in the water, it's the law that lets hedge fund and private equity managers pay a 15-percent capital-gains rate on the multimillion-dollar fees they collect -- substantially less than the top income tax rates paid by their secretaries, chauffeurs, and the pilots of their private jets.

On the surface, the stars are aligned. There is a newly elected Democrat in the White House who is desperate to raise revenues. Killing this tax break would raise $31 billion over five years. In addition, there are Democratic House and Senate majorities - representing the party of working people - and what could more unfair than letting billionaires pay taxes at a fraction of the rate of the guy with the lunch pail ?

But reformers seeking to raise the taxes of the super-rich should not assume this is a slam dunk. The Democratic majority in the Senate has looked at this provision before -- most recently two years ago. Many Senate Democrats saw the legislation as biting the hand that fed them and breathed a sigh of relief when, on December 6, 2007, Republicans mustered enough votes to filibuster the proposal to death.

Not only have hedge and private-equity fund managers earned massive amounts - in 2007, according to Institutional Investor's Alpha Magazine, John Paulson made $3.7 billion while George Soros and James Simons came in at just under $3 billion (to make the top 25 required $360 million) - even as their compensation does not require them to put their own money at risk.



Read more: http://www.huffingtonpost.com/2009/02/26/will-the-taxman-cometh_n_170082.html

[Kalyan]

1. not till i see Obama sign

I don't believe that the Obama admin, which received a lot of money from the hedge funds during presidential & congress election campaigns, will be able to increase taxes on hedge funds so quickly & without resistance ..

I will much rather believe this after seeing Pres. Obama putting ink to paper on the law ...

[dmosh42]

2. You only need to watch TV lately, to see there are very few...

proponents for 'fairness'. If you spend any time watching CNBC, you can quickly see all these Republican experts showing their charts and whining how we're doing it wrong. I watched 'Today' show bringing on all these neo-cons, including Mary Matalin, and asking these questions designed to get their 'spin' out to the public. In fairness, Matt Lauer did draw out Rick Santelli on his stupid claim to feel threatened by the administration after his nitwit performance a few days ago. For eight years I never heard any of this on how we were doing things wrong!

[MannyGoldstein]

3. Chucky Schumer Will Be Devastated

Maintaining that loophole was the cornerstone of his Senate career. Now he'll have to move on to something new. Perhaps bailouts for residents of the Hamptons? Subsidies for private jets?

[karynnj]

7. Schumer's best move might be to quickly sponsor an amendment killing it

so he can claim "he" killed it. He likely has the chutzpah to do so.

[Pirate Smile]

11. The press was shocked yesterday when he left a meeting at the WH with O and skipped the stake

out mics where the press was waiting. I believe some reporters fainted.

Schumer skipped the cameras - Change has come to America.

He may have not appreciated everything in the Obama budget. ;)

[MannyGoldstein]

12. He Really Did That?

That's entertaining. He must be crushed.

[Pirate Smile]

13. Yep - he didn't stop for the stake-out.

[newfie11]

4. Boy I hope so. All fingers are crossed this goes through. n/t

[Auggie]

5. If this goes through it will be a true sign of change

[unblock]

6. on noes! rich people won't bother! this will devastate greenwich, ct!!!1! i'm series!1!

[avaistheone1]

8. This is a good move, but let's get truly serious and roll back the Reagan tax cuts on the rich

The Reagan tax cuts to the wealthy helped set the stage in a major way for the economic fallout we are experiencing today.

[EraOfResponsibility]

9. some of you are so damned cynical

be happy, shit :eyes:

[underpants]

10. $2,000,000,000 for 25 people

http://journals.democraticunderground.com/underpants/98

After reading this Krugman articleI had to go check this out.

Basically this Hedgefund loophole that taxes most of the fund managers income at capital gains amounts (15%) and not at income tax rate (35.9%) will only benefit 25 people.

Not a typo TWENTY FIVE INDIVIDUALS.
Two BILLION dollars

$2,000,000,000

The entire memorandum is here
http://www.epi.org/content.cfm/pm120

July 24, 2007 | EPI Policy Memorandum #120

Tax breaks for billionaires
Loophole for hedge fund managers costs billions in tax revenue

This policy memo focuses on the privileged tax treatment given to hedge fund managers that results in a conservative estimate of over $6 billion in forgone tax revenue.

A simple calculation shows that this preferential tax treatment for the top 25 individuals alone costs the Treasury almost $2 billion.4 It serves to suggest that our estimates of tax losses are indeed conservative, as the losses from these 25 managers alone amounts to almost a third of our total.

[liberalla]

14. Kill it !

Hell, yes! kill it now!
The 'rot at the top' can afford it.

[sarcasmo]

15. Kick.

[cottonseed]

16. Kick