Carrying Water for Carried Interest

July 25th, 2011

Inspired by In Cantor, investment firms have voice at talks (Washington Post 7/25/11).


“[Support for these loopholes] isn’t all coming up from the grass roots. This goes to some long-time cozy relationships between House Republicans and hedge fund managers in the financial sector.” — Rep. Chris Van Hollen (D-MD)


Mutual fund managers pay tax at 15% instead of 35,

And Eric Cantor has worked hard to keep that loophole alive.


The lower rate is because the source of their compensation was a capital gain,

And Cantor says killing the loophole would cause “mom and pop businesses” hardship and pain.


But if your mom and pop both make millions managing hedge funds,

Cutting this loophole will still leave them with lots of after-tax funds.


The “carried interest” loophole is like saying that nonprofit workers shouldn’t pay any tax on their compensation,

Because the money’s original source was a donation.


Continuing this loophole will save super-rich fund managers $20 billion,

And all it cost them was contributions to Cantor of a measly $2 million.


That’s a return on investment of 10,000 to one.

Isn’t being rich and powerful fun?


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