Obama Tax Plan: Hedge Funders Could Pay $24 Billion More

Bloomberg:

Feb. 26 (Bloomberg) -- Executives at buyout, venture-capital and hedge-fund firms will pay an estimated $24 billion more in taxes over nine years if President Barack Obama gets his way.

Obama's 2010 budget proposal, released today, proposes raising taxes on the managers by treating carried interest, the portion of profits they take from successful investments, as ordinary income instead of capital gains. That change would boost the tax rate, starting in 2011, to 39.6 percent for most executives from the 15 percent they now pay.

Read the whole story: Bloomberg

Comments

[power1]

This is the Obama administration's assault on free markets and private investors. I have a question, how does raising taxes on private investment help the economy out of a recession? Does Obama even care about the economy?

[research]

Raising the persona income tax top marginal rate to 90% didn't hurt the economy.

I hope it does not go above 50%.

25% or less CAUSES bubble and crashed , historically.

[research]

Stop Derivatives including Shorts.

That will leave the hedge funds with commodities, stock and loans.

Derivatives cause the great depression (shorts are the earliest derivative, they are not stock.)

Credit Default Swap derivatives caused this crash.

The market works better without derivatives.

If derivatives worked, we wouldn't be bailing out hedge funds!

Do it NOW, every day of derivatives risks Quadrillion of debt come due. (1200 trillion last year)

[Lillopa]

We are not here to get rich, but we are all intitled to a good life for ourselvs our family etc. If getting rich is your plan great go for it ....but not on my dime pay your fair share of taxes--America is getting back its morals and intirity for all---I am no slave to the rich and I am just as valueable as a human being all are equal and equal justice for all---

[Acetracy]

TAXES & SPECULATION

The tax code today promotes SPECULATION. Some of the riskiest trades on Wall Street pay the lowest taxes (i.e. writing a broad-based index option at 10% tax rate). In the 1970s short term trading was taxed at 50% to 70% depending on your marginal tax rate. When Reagan lowered the marginal income tax rate, s/t cap gains tax came down as well. Plus we don't tax investment real estate gains if the proceeds are re-invested in six months. Wonder why we have of a speculative bubble in RE?

Tax rates on S/T cap gains should be up to 80% for 6 month holding period. Graduate the rate down with a longer holding period to when the l/t gains (plus 5 years) are down to 2% tax rate for the first $100,000. After $100,000, tax rate would start to increase. All derivative contracts should be taxed at 80%. The tax code should support long term, steady investors, not the Las Vegas minded, MIT trained quant trader.

[ntmessage]

This is disingenuous since in the old days we said that a secretary pays more than a hedge fund manager, yet now, a family making over 250,000 pays more instead. During the campaign Obama said people, singular making over 250,000 cannot deduct their mortgage interest or charity in high cost and high tax states.

A family making 250 in Mass, Cali or upstate NY, because of the cost of living is like making 100 in many other areas. It is unfair and frankly misleading.

[Lefty08]

Somehow ntmessage, I just don't feel your pain. I bet there are millions of people who'd trade places with you in a heartbeat. Count your blessings and be happy that you are doing better than 95% of the rest of the country. You can afford to contribute more. Please, no more whining now.

[ntmessage]

The only point is that it is bad politics and bad policy. We are an aspirational society and just like a confirming loan limit in a low cost state is 419k, they are 625k in higher cost states. Perhaps there should be a different level to make this equitable from a cost of living perspective.

This level is equivalent two people working hard making 40-50 each in a different state from a quality of life perspective. This is for owner occupied homes only. Remember state and local taxes in these states are over 11% by itself. Other costs and taxes are immense.

It should be raised to 350-500k per family then most would support it. Further all those saying that this is like 1988 conveniently forget inflation.

If you can relate to the millions of jobs affected in these states on top of this then you can see that this is a big mistake.

[care4mypeeps]

Mr. President thank you so much for your candor and honesty as you slice and dice the deficit.
the American People have waited eight years for the change you brought with you. The 24 Billion more the Hedge Funders will pay is music to my ears. Every time you and your cabinet steps onto the stage to inform us of the changes made and the choices that were mulled over to reach the compromises to correct the mistakes of the past solidifies my position that change will be hard but is necisary to move us forward. I know that you are not the Messiah as the critics have charged that title has and will always belong to Jesus Christ. Our prayers are with you and your lovely family and the staff that have dedicated themselves to you.

[Lillopa]

Pres Obama knows the tax laws and has studied them--knowing the rich pay hardly no taxes with all their right offs, tax cuts, tax loop holes and is part of the problem and lost tax revenues--rich pay your fair share of taxes and quit punishing the middle class because what we make we are paying ours! unfair unjust tax laws period--- --

[BarackstarObama]

There's that nonsense about retaining execs again... no way, we don't believe that.

[PhilipTaylor]

The average Hedge Fund Manager makes $500,000,000 and one made $3,700,000,000!

So paying a "FAIR SHARE" of taxes will still give them more take home money in one year that the lifetime incomes of 500 families to 3,700 families!

Still something "VERY WRONG" with a "Casino Betting Paper Shuffler" making that much money while using marginally legal Leveraged Shorting of Companies that Bankrupt those companies and send America into a Crisis of Bailouts in a few weeks!

[ccpostman]

About time.

[gwashington777]

exactly

[ilovevegas]

The rich simply do not pay there fair share in taxes, thats not news. I doubt they ever will.

[marinade]

Why have hedge funders been allowed to get this special treatment?

According to this blogpost by Thomas Edsall, both Democrats and Republicans in Congress are cozy with them.

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

[Grannysue]

Yes Tax the Bastards!

[Justinpassing]

This is a very good (long over due) move IMHO.

[nomoredead]

Now look at Jim Cramer's " Charitable Trust " he talks about on TV. You know that is some kind of way to avoid taxes.