[FoRK] Obama disingenuousness

Jeff Bone <jbone at place.org> on Thu Apr 24 09:31:24 PDT 2008

On Apr 24, 2008, at 10:02 AM, Rob Harley wrote:

> Sigh.  It's rather well-known that many, especially in private equity,
> do indeed pay the long-term capital gains rate on most of their US  
> income.
> Google for Baucus-Grassley bill e.g.,

Sigh.  That's true, but (hopefully obviously) private equity is a very  
different (long-term investment) beast from trading with any  
frequency, which is characteristic of the folks we're talking about.   
And gains from trades with tenor of less than a year plus a day are  
taxed at the (max) short term cap gains rate with a few exceptions  
(all short sales are taxed as short term gains regardless of tenor,  
there is some special treatment for futures trading, and so on --- but  
mostly exceptions in favor of the revenuers.)  For flow-through net  
income deriving from this type of trading activity, which is the kind  
of thing that these hedge funds likely derive the bulk of their  
revenue from, that's the final word.  Period, end of discussion,  
there's no controversy whatsoever.

Let me state my assertion very clearly, all FUD and links and  
speculation aside.  I would put a fair bit of money behind the  
following proposition:  among those 50 individuals in the list in  
question and regarding the $29B they collectively made last year, I  
would guess that not only are they among the highest individual dollar- 
contributors to US Federal revenue collection in 2007, but they likely  
also are among the highest payers percentage-wise in terms of  
aggregate blended tax rate.  Demonizing these people is biting the  
hand that feeds, or more precisely, biting the hand that's already  
doing the most to offset the insane spending of our democratically- 
elected officials.  Fuck, people, even BEBERG gets this.

Further, the idea that there are all these tremendous loopholes that  
allow folks with the required degree of wealth to shelter their gains  
from taxation and pay virtually no taxes is an idea with some popular  
currency but is, frankly, an absolute myth.  There are some, but when  
you have tremendous annual gains in wealth stemming from intrayear  
economic activity of any kind, you're not getting away from paying top  
dollar on those gains.  Short of expatriating yourself, your wealth,  
and your income streams, and never setting foot back in the USA, you  
aren't gettin' away from the Tax Man.  The best you can do --- or at  
least the best I've been able to do --- is minimize the amount of  
future taxation I can expect when taking those gains putting them to  
work long-term by exposing them to long-term risk.  And by minimize I  
mean "try to reduce the amount of the second or third or later round  
of taxation to the long-term cap gains rate."

If you have data to the contrary, contact me off-list, I'm all ears.


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