Transportation money is controversial, but hedge fund managers need their tax breaks
(ebrandt78 / Flickr)
Think Progress:
One of the tax breaks upon which President Obama has focused is a provision that allows hedge fund managers — who make billions annually — to receive a substantial tax break. This particular tax break, known as the carried-interest loophole, allows hedge fund managers to treat the money they receive from investors as capital gains, subject to a 15 percent tax rate. Though this money is a paycheck received for services, just like a movie star receiving a bonus if her movie does well, it’s treated as investment income.
Since hedge fund managers are some of the richest people in the country, this tax break actually causes a significant loss of revenue. In fact, according to calculation by RJ Eskow, closing this loophole would raise more than $4 billion per year just from the 25 richest hedge fund managers:
The top 25 hedge fund managers in the United States collectively earned $22 billion last year, and yet they have their own cushy set of tax rules. If they operated under the same rules that apply to other people — police officers, for example, or teachers — the country could cut its national deficit by as much as $44 billion in the next ten years.
I want to reiterate that, because it's nearly unbelievable. On Wall Street, a mere 25 wealthy Americans earned $22 billion between them. Last year, during the recession. After the United States government bailed out their entire industry. After their industry augered the entire world economy six feet into the ground.
Closing this one loophole would raise over $40 billion in a decade. No, strike that: closing this one loophole on just these 25 people would raise that $40 billion: closing it for all hedge fund managers would raise several times more.
Now, before you start feeling too sorry for these managers, keep in mind that even if we closed their tax loophole, they'd still be taking home 18 freaking billion dollars between them, as of last year, which is enough money to buy and sell the rest of us many times over. We're talking about a set of people who could flush a half billion dollars down the toilet just to see if the local sewer system could handle a half a billion dollar bills flushed down it. We're talking about a set of people who could each buy their own private islands with just one year's salary, and still have enough left over to buy an airplane, a luxury car and a large Pepsi.
Why the holy f--- do these people need an additional tax break? What, are we afraid they might withhold their market-crippling wisdom from the rest of us, if they have to pay the same tax rate as every other damn working person in America? Where are the calls for "austerity" and "shared sacrifice?"
On the contrary, these are the sorts of tax breaks and loopholes for the rich that the Republicans are vociferously defending. They're asserting, in fact, that they will shut down the United States government before letting any of the super-rich be taxed a dollar more, and even suggesting such a thing causes the Republicans to walk out of debt negotiations. You may be asked for austerity, but Wall Street isn't. The poor, the young, the old, the sick, and the unemployed are all being required to make deep sacrifices, at the insistence of Republican governors and legislators, but these people? We can't even ask that they pay the same tax rates that you and I do. That would be goddamn outrageous.
To hell with getting out of the recession, or providing work, or even providing enough money to repair our nation's critical infrastructure—wealthy hedge fund managers need a special custom tax break, and that overrules all the rest of it, and the Republicans are honestly going to shut the government down rather than let it happen.
It's not conservatism, it's radical extremism on behalf of the enfranchised. It is an outrageous sense of higher privilege on behalf of the ultra-wealthy that overrides all the other needs of the nation. It is unpatriotic, irresponsible, immoral, unserious, and yes, from Congress to the Supreme Court, it is most definitely a class war.