And when there was some noise a couple years ago about changing that tax loophole the idea was immediately squashed by congress and it died a quiet death. Almost as if congress does Wall Street's bidding to the detriment of the overall national interest. Almost.
That "loophole" you're talking about is known as carried interest. Carried interest exists for a good reason (at least to my understanding); so that partners can with less capital can build sweat equity. Sure there are people who take advantage of it, but it does serve a purpose (taxes more so than retaining their profits). I'm not saying there aren't plenty of greedy hedge fund managers, but understanding why it exists will at least help form a solid opinion.
>The arguments for the carried interest are fairly compelling: without it, the partners who contributed ideas and talent end up being taxed much more heavily on their earnings than partners who contributed financial assets. This is not only sort of unfair, and impedes the ability of talented people with few financial resources to move into the moneyed class, but also might have implications for economic growth: if your gains are going to be taxed at ordinary income rates, why quit that safe job and risk all on an untried venture?
