Mr. Gross like many other in the mass media do not understand how hedge fund and private equity managers get paid and taxed so these writers tout they pay 15% - which captures their readers but is being a sensationalist and not getting the truth across. HF and PE managers make alot of their money as management fees which is taxed at the highest rates 35%++ HF managers do take a portion of their income as an allocation of profits and your typical HF manager makes profits by earning ordinary income (ST capital gains etc) which again is taxed at 35%++. This year alot of HF guys actually will be paying an effective rate over 35% on their profits interest as they realized gains earlier in the year while they sat on some unrealized losses (non-taxable losses) at year end.
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Bush’s Tax Cuts Are Dead
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In fact, there's a degree to which many of the wealthy have more to fear from McCain than from Obama or Clinton. McCain isn't a creature of Wall Street. Clinton, Obama, and Giuliani have received far more cash from the financial-services industry than McCain has. Mitt Romney made his fortune in private equity. Of the three (or four) remaining serious candidates, McCain is probably the most likely to call bull on the loophole that lets private-equity and hedge-fund managers pay a 15 percent capital gains tax on wages they're paid for managing other people's money.
So plutocrats, call your accountants!
© 2008
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