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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