Who could be opposed to closing a tax loophole that allows hedge-fund and private equity managers to treat their earnings as capital gains -- and pay a rate of only 15 percent rather than the 35 percent applied to ordinary income?
Answer: Some of the nation's most prominent and wealthiest private asset managers, such as Paul Allen and Henry Kravis, who, along with hordes of lobbyists, are determined to keep the loophole wide open.
The House has already tried three times to close it only to have the Senate cave in because of campaign donations from these and other financiers who benefit from it.
But the measure will be brought up again in the next few weeks, and this time the result could be different. Few senators want to be overtly seen as favoring Wall Street. And tax revenues are needed to help pay for extensions of popular tax cuts, such as the college tax credit that reduces college costs for tens of thousands of poor and middle class families. Closing this particular loophole would net some $20 billion.
It's not as if these investment fund managers are worth a $20 billion subsidy. Nonetheless they argue that if they have to pay at the normal rate they'll be discouraged from investing in innovative companies and start-ups. But if such investments are worthwhile they shouldn't need to be subsidized. Besides, in the years leading up to the crash of 2008, hedge-fund and private equity fund managers weren't exactly models of public service. Many speculated in ways that destabilized the whole financial system.
Nor are these fund managers especially deserving, as compared to poor and middle-class families that need a tax break to send their kids to college. Nor are they particularly needy. Last year, the 25 most successful hedge-fund managers earned a billion dollars each. One of them earned 4 billion dollars. (Paul Allen's personal yacht holds two luxury submarines and a helicopter. Henry Kravis is one of the wealthiest people in the world.)
Several of these private investment fund managers, by the way, have taken a lead in the national drive to cut the federal budget deficit. The senior chairman and co-founder of the Blackstone Group, one of the largest private equity funds, is Peter G. Peterson, who never tires of telling the nation it faces economic ruin if deficits aren't brought under control. Curiously, I have not heard Peterson advocate closing this tax loophole as one way to further the cause of fiscal responsibility.
Closing tax loopholes for billionaires may seem like a no-brainer, especially at a time when the nation is cutting back spending on the middle class -- slashing budgets that fund child care, public schools, and public universities. Tens of thousands of teachers are getting pink slips.
But you can expect a huge fight.
There is also a moral issue here. Call me old fashioned but I just think it's wrong that a single hedge fund manager earns a billion dollars, when a billion dollars would pay the salaries of about 20,000 teachers.
This post originally appeared at RobertReich.org.
IBM initially approached the developer of the CP/M operating system but for whatever reason they did not reach an agreement.
IBM then approached Microsoft about an OS for their machines. Gates said 'Sure, I've got something.' He didn't. He found the guy who had developed QDOS [Quick and Dirty Operating System] and bought that and then sold it to IBM as DOS.
There is the lie.
And to 'professor', Bill Gates never earned or made $60 billion. That [now inflated] number was the value of his MS shares. He's still sitting on tons of those shares and only earns money when he sells them.
"There is also a moral issue here. Call me old fashioned but I just think it's wrong that a single hedge fund manager earns a billion dollars, when a billion dollars would pay the salaries of about 20,000 teachers."
With rampant unemployment and the economy in a meltdown because of these jerks, I don't think they deserve a nickel. Its too bad we can't banish such bad apples.
I suggest you seek a new source of information, spanky......