Taxing...

If you've been reading the articles I've posted recently you've followed the basic premise that hedge funds and private equity funds pay 15% tax on their earnings as capital gains instead of 30-35% corporate tax rate everyone else pays. Ben Stein's article in NY Times last week talks about this. Remember, Ben Stein worked for Nixon, he's a conservative, for the most part. Now, my former senator Chuck Shumer from New York thinks this is o.k. This is the same man who goes after the Bush Administration for cutting taxes for the rich. Read this article in the NY Times, In Opposing Tax Plan, Schumer Breaks with Party.

But in the case of the tax proposals, the strategy behind Mr. Schumer’s efforts is putting to the test another set of principles he is known for. He has regularly portrayed himself as a progressive politician who identifies with the struggles of the middle class and is sharply critical of the selfish “plutocrats” who he says control the Republican Party.

And he has written a book on the subject, advising policy makers to follow his strategy of deciding positions by identifying with the concerns of people like the Baileys, a fictional middle-class family from Long Island that he uses as a guide.

Now, leaders in his party are using similar language to justify their efforts to raise taxes on hedge funds and private equity firms, saying the new revenues will help pay for health and education programs and begin to reduce the impact of the alternative minimum tax on the middle class. The proposals have gained momentum in recent weeks but face formidable political obstacles, primarily in the Senate.

...

In June, senior House Democrats separately proposed raising the tax rate on the investment gains of fund managers — known as “carried interest” — to the ordinary income tax rate of as much as 35 percent, from the capital gains rate of 15 percent.