$2,000,000,000 for 25 people

[underpants]

After reading this Krugman articleI had to go check this out.

Basically this Hedgefund loophole that taxes most of the fund managers income at capital gains amounts (15%) and not at income tax rate (35.9%) will only benefit 25 people.

Not a typo TWENTY FIVE INDIVIDUALS.
Two BILLION dollars

$2,000,000,000

The entire memorandum is here
http://www.epi.org/content.cfm/pm120

July 24, 2007 | EPI Policy Memorandum #120

Tax breaks for billionaires
Loophole for hedge fund managers costs billions in tax revenue

This policy memo focuses on the privileged tax treatment given to hedge fund managers that results in a conservative estimate of over $6 billion in forgone tax revenue.

A simple calculation shows that this preferential tax treatment for the top 25 individuals alone costs the Treasury almost $2 billion.4 It serves to suggest that our estimates of tax losses are indeed conservative, as the losses from these 25 managers alone amounts to almost a third of our total.

[SpiralHawk]

1. "Smirk, smirk, smirk" - Cabal of corrupt republicon cronies

"We elite republicon Homelander cronies are special. Smirk smirk smirk"

[The Backlash Cometh]

19. Share my sorrow.

I just learned that Chelsea Clinton is now employed with a Hedge Fund.

Do you think the same seduction process that gave us George Bush II, is happening to Chelsea?

[HeraldSquare212]

22. Didn't Edwards work at one, too?

[The Backlash Cometh]

25. Could be.

But how did he land the job? Was it through his family connections? Or did he actually have the resume and merit the job?

[Lucky Luciano]

38. Attorneys often have merit.

I work at a hedge fund :hide:. Attorneys could be useful, for example, in merger arbitrage, better known as risk arb for reasons I never understood. Here they can scour the documents related to a merger, understand if the government will have anti-trust issues, etc. The only thing that matters, for the most part, is whether the deal closes or not. If the deal closes, the risk arbitrageur makes good money. If the deal breaks and the risk arbitrageur is caught in a position (which is usually monumentally big), then millions can be lost. So, the only thing they care about is whether the deal closes or not. 90-95% of deals close....but you do not want to be caught in the one that breaks and that is almost all that the risk arb guy does - the analysis on how to avoid the deal that breaks, loses millions, gets you instantly fired, and possibly unhireable forever afterwards. The attorney is useful there.

Example:

Alltel (AT) is currently being LBOed. The takeout price is 71.50 cash. The stock currently trades around 66.50 and I estimate that it will close in late 2007 or early 2008. If you think the deal will close, you can buy for 67 and make $4.5 when it closes for 71.50(dividends are very relevant here too, but let's ignore that). There are other considerations though. You want the deal to close soon because if it takes a long long long time, then you might have earned the $5 by investing in a government bond instead! That is known as the cost of carry - the amount you could have earned risk free by investing in a governemnt bond. That said, the $4.5 gross spread is quite huge. This is a spread so big that it may suggest people think the deal may break. In fact people calculate what is known as the implied probability of a deal break by looking at the net spread (which includes dividends and carry costs) and comparing it to an estimate of a loss on a deal break. This stock could plunge to 50 if the deal breaks. The most likely reason that this deal would break is because of the current credit crunch that will make it hard to finance the deal with selling bonds. If the financing cannot be gotten, then the banks and the private equity firms on the hook for this may break the deal and pay the break fee (I forget what the fee is, but $600M would be a good guess). I think the deal will go through and that it is a good time to double down on our position even though we got in around 68 or so (A LOT of shares, so the $1.00 we are down on each share stings). On the very likely deal closing scenario we do very well....if the deal breaks because there is no way to finance the deal, then look out below as we will lose 4 times more than we would make (Assuming we double down)...but the deal is 90% to go through.....exciting...yes...always on the edge of my seat! In fact the stock was down to 65 and change a few days ago which really stung...we were not allowed to take on more risk though, which was a bummer. That was a golden opportunity!

[The Backlash Cometh]

40. Wow! Thanks for that information. I recommend it to anyone who is curious

about Hedge Funds.

[JohnShadows]

2. But hey, how else can they afford that fifth home, you know,

the palace in Costa Rica?

[yardwork]

3. And which candidates will those 25 individuals support?

How much of that TWO BILLION DOLLARS will go from the grateful recipients to the reelection campaigns of the worst people in the country?

[Lucky Luciano]

39. Of course this is unfair, but many of the hedge fund managers

do slant democratic. George Soros is not the only one.

[myrna minx]

4. How many bridge repairs would that 2 billion afford?

Oh, that's right. I'm not thinking of the plight of the billionaires. Won't anyone think of the BILLIONAIRES?! :sarcasm:

[underpants]

9. $80,000,000

each

I did the math on my adding machine. I can show you the tape.

[myrna minx]

16. *snort* As an accounting person, that made me laugh.

I hope those bloated pigs enjoy their 80 million, while members of my town still lay in a watery grave in the Mississippi.

[underpants]

17. B.S. in Accounting

1996

:hi:

:accountantsmilie:

[myrna minx]

18. Don't you just marvel at the the missing billions?

It's jaw dropping as a citizen, but as an accountant, I can't comprehend it. The bushies brought in a more of a free form jazz explosion of extreme accounting. :rofl: Your government in action! Now without a paper trail! :hi:

[underpants]

21. Well you know, those Iraqis just aren't very good at bookkeeping

:rofl:

Bremmer and all the excuseniks use that line all the time.

These are the people who INVITED CALCULUS they INVENTED ZERO! Now I know that math and accounting aren't the same thing (far from it) but for crying out loud come up with something better than that!

[myrna minx]

23. Yeah, those descendants of the Sumerians don't know nuttin'

about bookkeeping. :rofl: They only invented cuneiform writing for inventory purposes.


on edit: Ah, accounting humor. It's a staple of *every* civilization. :rofl

[Divine Discontent]

36. won't anyone think of the billionaires?!

LOVE IT!

thanks to those wonderful leaders in DC, all billionaires can finally sleep a little easier tonight...

[spindrifter]

5. Why is Chuck Schumer really so

reluctant to take this on? (Please read Krugman's opinion piece with link above re this issue.) This is just so wrong!

[babylonsister]

7. I'd like to know about Shumer's motives, too. nt

[underpants]

8. Chuck seems to think that he and/or the Dems get some of it

Maybe all 25 of these people actually ARE his constituents :shrug:

even if they are this is wrong. Wrong on many levels.

[HamdenRice]

26. Some Dems will get it and they are Chuck's constitutency

You might think that Chuck is the Senator from New York. He is, but he is also the Senator from Wall Street. While a majority of Wall Streeters are greedy repugs, a minority are greedy Dems, and those are the people who Chuck represents. They outweigh the entire state of New York when it comes to banking/finance/securities/hedge fund laws.

[stillcool]

6. Makes me pause when I hear about..

raising taxes..as in raising whose taxes?

[malaise]

10. Here's another good read: Tax-cut death toll

http://commonsense.ourfuture.org/tax_cut_death_toll?tx=3
<snip>
The bridge-collapse tragedy is a teachable moment: This is your government on conservatism.

This year two Democratic Minnesotan legislatures passed a $4.18 billion transportation package. Minnesota's Republican governor vetoed it because he had taken a no-new-taxes pledge, Grover Norquist-style. That's just what conservative politicians do.

The original bill would have put over $8 billion toward highways, city, and county roads, and transit over the next decade. The bill he let passed spent much less.

"Much more needs to be done, but the advocates overreached," Pawlenty said concerning his veto. "I told leaders that if they came in with a more reasonable plan, maybe the results would have been different."

Yes, maybe they would have been different indeed.

[TheMadMonk]

35. It would not have made a lick of difference in this case.

The maintenance/repairs necessary to prevent this disaster needed to have been begun years ago. One small failure began this collapse. However, it was the cascading failure of a number of other, also weakened, structural members that allowed the collapse to continue to the point where not even "good metal" could halt it.

Part of the problem lies in the overly broad classification "Structurally Deficient", which pretty much covers everything beyond "needs painting" that falls short of gross weakening of the structure as a whole. Whilst a bridge (or other structure) remains "merely" structurally deficient its funding priorities fall behind those of bridges judged in need of immediate attention. And further, a big expensive repair job will generally take the back burner to a number of smaller cheaper jobs, because it looks better in the news for the politicians, and better on the job performance evaluation of the pencil pusher deciding where the money goes. The idea of being held responsible for shutting down eight lanes of traffic whilst extensive repairs were carried out probably didn't fill anyone with joy either.

[JerseygirlCT]

11. Holy cow!

This needs to get around.

And their campaign contributions shouldn't be allowed to factor in this situation!

[williesgirl]

12. Off to the greatest page

[underpants]

13. Thanks

This does need some attention.

[Summer93]

14. Kick and Recomment

More people need to know about this.

[Greyskye]

15. Looks worthy of a KO comment

:kick: & R!

[Elspeth]

20. The US government: we serve the haves and have-mores.

:grr:

[zbdent]

24. Aren't these 25 of the ".5 percent of the taxpayers" paying

"95 percent of the taxes"?

er ... not paying taxes ...

[helderheid]

27. Let them pay for the infrastructure.

[BeHereNow]

28. Well HEAVEN FORBID that any of THEIR money go to education, healthcare or infrastructure...

The elite could give a damn about this country-
Ship them all to an island and let them count their money.
God damn these people to hell.
BHN

[hfojvt]

29. according to the article it benefits more than 25 people

They said the entire cost of the loophole is $6 billion. The amount that goes to the top 25 is $2 billion. That's 'only' $80 million per person.

I do not think the loophole is the problem. The problem is more basic - taxing unearned income at a lower rate than earned income.

Their philosophy basically is (can't remember who said it) - "only working people should have to pay taxes"

Mitt Romney, naturally, is still pushing that. He thinks that interest income and dividend income should not be taxed at all, just like Bush proposed in 2003.

I might feel the same way if I was like Romney and had $200 million 'earning' interest and dividends. I don't think so though. I mean, it would be clear that such a plan would benefit me, but I think I would realize that I already FU$%ING HAVE IT MADE and really don't need any such benefits.

[underpants]

41. Good points but let's not forget that this is $80M PER YEAR

PER YEAR

[Robson]

30. Congratulations...it is a very important point

Congratulations on hitting a nerve as your thread hits a very important point where the ultra wealthy money changers get obscene tax breaks. BTW "money changers" is a very appropriate title as they do absolutely nothing productive for the US economy except cannibalize and "part out" businesses and send them to China for profit.

BTW I tried to initiate a discussion several weeks ago on this very point, and I couldn't even get one response from a DUer even after several follow-ups. I was beginning to think that DU was made up of rich Wall St. money people that would just as soon bury the discussion, instead of average Americans.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x25953

[hfojvt]

34. ah- economy

The sub-forums tend to be kinda slow. I rarely visit them myself. I used to visit economy, but it seemed to be mostly 'market' discussions.

[underpants]

42. We've all had that happen

I have seen threads, really well done ones like yours, sink like a stone and others stay afloat for days. Who knows why?

[rucky]

31. NAME THEM! n/t

[WinkyDink]

32. WTH are they SPENDING IT ALL ON??? Yachts? Diamonds? DRUGS?! WTH??

[Demeter]

37. Republicans

Don't worry--they're going to lose their shirts in the economic collapse.

[1776Forever]

33. Wonder how many bridges they have to go over - oh they have helicopters!!!!!!!!!!!!!!!!!!

Oh yeah - all the little idiots that keep voting Repub because they think they are in the club!! Right!! The only club 99% of them are in is the Stupidity Club!!!!!!!!