Well, it looks like all the contributions and lobbying have paid off for hedge funds, as the U.S. House of Representatives approved a tax bill today that included tax relief from the Alternative Minimum Tax (AMT), but removed provisions that would change the preferential tax treatment and private quity groups receive.
So, without the offset from the change in hedge fund taxation, we will ad an extra $50 billion or so to the National Debt.
The AMT change was certainly needed as it threatened to impact over 20 million Americans unless something was done, and an argument can be made that "pay-as-you-go" shouldn't be applied in this case.
The argument that hedge fund managers should only pay 15% their income (cleverly disguised as "carried interest") in taxes is not nearly as clear. Keep in mind that these are, multi-million dollar incomes, so hiring a few lobbyists is comparatively inexpensive.
There are a few people with integrity. Warren Buffett, chairman of Berkshire Hathaway Inc., testified before the Senate Finance Committee that he believes carried interest should be taxed at the income tax rate of up to 35 percent.
In the meantime, the hedge fund tax loophole continues, and we pile more onto our National Debt, which is closing in on $10 trillion.
What do you plan to tell your grandchildren, when they ask you why our generation spent their future?
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