Even though they make millions - even billions - of dollars a year, private equity managers pay only 15% of their income in taxes. By comparison, if you're a single person who makes a bit more than $31,000 dollars this year, you'll pay 25% of your income in taxes.
This past September 6th, the House Ways and Means committee held the "Hearing on Fair and Equitable Tax Policy for America's Working Families." The hearing was intended to "focus on a number of tax fairness issues, including the tax treatment of investment fund managers and the impact of the alternative minimum tax on working families. It will also examine the reasons why investment funds are being organized offshore."
That might sound like a snoozefest, but hyper rich hedgefund managers are furious at what the Congress is considering. Venture capitalists are practically wetting themselves in fear.
Both the House and the Senate are considering separate pieces of legislation that would raise income taxes on private equity managers to 35%. Sadly, that's as high as our current marginal income tax rates go. Since all these guys are making millions, it should be more like 90%. Bring back the Eisenhower marginal income tax rates! The hyper rich need to be reminded that paying taxes is patriotic.
And why do we let investment funds that service primarily American investors organize offshore?