Power of Story
Send a Tweet        
- Advertisement -

Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 1 (1 Shares)  

Printer Friendly Page Save As Favorite View Favorites (# of views)   1 comment
OpEdNews Op Eds

Bus Drivers Shouldn't Pay More Taxes Than Millionaires

By       Message Thom Hartmann     Permalink
      (Page 1 of 1 pages)
Related Topic(s): ; ; ; , Add Tags Add to My Group(s)

Must Read 2   Well Said 1   Valuable 1  
View Ratings | Rate It

opednews.com Headlined to H3 9/3/16

Author 1486
Become a Fan
  (124 fans)
- Advertisement -

Reprinted from Smirking Chimp

Way back in 1985, President Ronald Reagan outlined a very simple principle of tax fairness during a speech at Northside High School in Atlanta, Georgia. Loopholes that allowed millionaires to pay less in taxes than bus drivers, he said, were absurd. That was one of the few times Ronald Reagan was right about something, which makes it all the more amazing that 31 years later, one of the loopholes he was talking about is still one the books.

I'm talking, of course, about the carried interest loophole.

- Advertisement -

Although it has its origins in the 20 percent profit on goods that ship captains demanded in the medieval glory days of sea trade, the carried interest loophole is today just another carve-out for banksters.

Here's how it works: Let's say you're a hedge fund manager and you're in charge of a massive hedge fund worth billions of dollars. You, as the hedge fund manager, have a choice of the way you make your money. You can either take it home in the form of a fee, or you can take it in the form of a percentage of the profits accrued from the investments your fund makes. If you choose to take home your money in the form of a fee, it's taxed at the top income tax rate of 39.6 percent. But if, on the other hand, you decide to take your money home in the form of profits -- carried interest -- it's taxed as capital gains, at around 23.8 percent, a huge tax saving for the billionaire hedge fund managers.

In other words, even though the money you're taking home is, for all intents and purposes, your income, a glorified accounting trick turns it into something else, and your tax bill is a lot smaller as a result. The original idea here was to protect people who invested their own money in risky ventures.

- Advertisement -

But that's not how things work these days. There are now so many protections in place for hedge fund managers and general partners that the risk they face is very, very minimal. Giving them a tax break to protect against "risk" is redundant, not to mention costly for the rest of us.

Even though it only benefits about 2,000 people every year, the carried interest loophole costs taxpayers -- you and me -- about $2 billion in lost revenue every single year. Closing it, some studies have found, could bring in as much $18 billion over 10 years.

This is just common sense; even some banksters themselves know that.

Writing in The New York Times this weekend, Alan J. Patricof, the co-founder and managing director of venture capital firm Greycroft, called on Congress to close the carried interest loophole once and for all. He called it an issue of fairness, which it obviously is.

But there's another aspect to the carried interest loophole that's rarely discussed: that hedge funds themselves are often dangerous. They destabilize the economy, and feed off the rest us, often ripping off working people to make money.

They don't build anything; they're essentially parasites, and the carried interest loophole often encourages people to join a profession that can pose a big risk to the rest of the economy.

- Advertisement -

It's time to repeal the carried interest loophole for both these reasons. And then let's begin a discussion about regulating or redefining hedge funds to limit the damage they can do to our economy.

 

- Advertisement -

Must Read 2   Well Said 1   Valuable 1  
View Ratings | Rate It

http://www.thomhartmann.com
Thom Hartmann is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network, live noon-3 PM ET. www.thomhartmann.com His most recent books are "The Last Hours of Ancient Sunlight," "Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights," "We The People," "What Would Jefferson Do?," "Screwed: The Undeclared War (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon



Go To Commenting
/* The Petition Site */
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Related Topic(s): ; ; ; , Add Tags
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

S&P Blames Republicans, Mainstream Media Fails to Report It

Globalization Is Killing The Globe: Return to Local Economies

The Great Tax Con Job

The Truth about the Trust Fund-- Destroying Social Security to Destroy the Two Party System

The Deciding Moment: The Theft of Human Right

Healthcare: First They Came for the Banksters