Thursday, February 26, 2009

Budget Proposal Taxes Hedge Fund Carried Interest as Ordinary Income

I've never understood taxing capital and labor at different rates and I definitely didn't see any public good in the carried interest loophole. Are hedgies going to stop trying to aggrandize their personal wealth because they are taxed like rock stars? I don't think so.
Here's a snippet from the Bloomberg story "Obama’s Budget Proposes Up to $750 Billion More for Bank Aid ":
...The budget proposes to raise taxes on hedge-fund managers by $24 billion by eliminating the so-called “carried interest” tax loophole that allows investment managers to pay 15 percent tax rates on their compensation rather than usual income tax rats [sic]....