Democrats & Liberals Archives

Why Should Equity Managers Pay Less Taxes?

Private equity fund managers make billions of dollars. Yet, according to current law, they pay only 15% of their income in taxes. This is less than middle class workers pay. How come a guy who makes over a billion dollars pays a smaller percentage in taxes than a guy earning $100,000 or less?

A private equity fund manager generally does not invest any money, but gets a group of people to invest. Because of the work he does, the manager usually gets about 20% of the profits. The right to receive this money is called "carried interest."

Now, this "carried interest" is currently taxed at the 15% capital gains rate instead of the normal income tax rate of 35%. Pretty neat deal for a guy - not just any guy, but a billionaire - who does not invest anything, no?

Is this fair? No. As part of the bill before Congress that cancels the Alternative Minimum Tax for the middle class, there is a provision for closing this massive loophole benefiting private equity fund managers. They will pay income taxes like everyone else, if the bill passes.

What do you think the super-wealthy and most Republicans in Congress are doing? They are mounting a blitz to keep the loophole as it is. What are you doing about it? Why don't you call or write your congressman and senators and tell them to get rid of this massive "carried interest" loophole.

Posted by Paul Siegel at November 8, 2007 11:30 PM
Comment #237914

Should this be passed?


Will it be?

Probably not.


Posted by: leatherankh at November 9, 2007 8:58 AM
Comment #237926

What am I doing about it? I am writing my Congress person and Senator, as you request.
I’m telling them that no matter how you spin it, a person who pays tens or hundreds of thousands of dollars in taxes, is NOT paying less in taxes than the person who pays hundreds or thousands.

Should equity managers pay less taxes? Yes, we all should!

Posted by: kctim at November 9, 2007 11:24 AM
Comment #237934

If the AMT is to be eliminated or indexed the revenue needs to be made up or the huge,dangerious deficit will grow even faster.
Hedge fund managers should be treated just as other fund managers and taxed at the same rate….period.

Posted by: BillS at November 9, 2007 12:15 PM
Comment #237939

Even if Congress musters the votes to pass this bill, it will be vetoed.

Posted by: jlw at November 9, 2007 12:55 PM
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