Last week I posted about the massive tax breaks enjoyed by hedge funds managers, among others. This morning David Weidner puts more numbers around this outrageous tax subsidy for some of the richest people on earth:
For example, the top 25 highest-paid fund managers made an average of $570 million in 2006. They received a $79.8 million benefit under the current tax law, mostly because they were able to declare a large percentage of income at the capital-gains rate.
The US Senate is close to raising the tax rates on these earnings from 15% (where they currently shelter under the guise of being “investments,” not what they really are–trading income) to 32.7%. (Heaven forbid that the tax rate should be 35%, which is what the rest of us would actually pay at those income levels!)
Defending their position under the farcical argument that they are entrepreneurs who deserve this social subsidy, the hedge fund industry will no doubt poor millions of dollars into preventing this change from becoming law, so don’t count on economic rationality or fairness returning any time soon.