Quote:
Originally Posted by 12clicks
Considering the money they EARNED that was then invested was taxed at 52.8%, you have no point
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First - The fees from hedge funds which would be salary are taxed as long term capital gains. That is the big loop hole. It would make sense to close just that loop hole.
Second - Warren Buffet, Bill Gates, etc did not pay 52.8% on their vast holdings. The majority of their holdings have never been taxed as they are still being held and growing tax free. They then make dividends which are taxed at the lower rate. I think this is the majority of people in the multi millions range and certainly is the case of those in the billions. Economists agree this rewards investment. Should long term capital gains tax keep being lowered to attract more investment? Maybe.
I don't disagree with the current system that much but the Hedge Fund thing is abuse. If you charge 2% of the capital and 20% of the profit to manage other people's money then some of that is fees and should be taxed as income not long term capital gains. As the Hedge Fund makes money even when the Fund does not so that is income to them. Then add in that people are using the structure to hold high cash flow investments to avoid the higher rates and it is just messy.