Obama Could Close the Carried Interest Loophole Today

If he wanted to. Explained at Down With Tyranny:

Hedge fund "managers also receive 20 percent of gains that their funds generate over time, known as carried interest. These profits are taxed at the lower capital gains rate, thanks to a 1993 ruling by the Treasury and the Internal Revenue Service.

Who are a few of the beneficiaries?

Here's an estimate of the salaries of the top five hedge fund managers, according to Barry Ritholtz:
David Tepper, Appaloosa Management — $4 billion
George Soros, Soros Fund Management — $3.3 billion
James Simons, Renaissance Technologies — 2.5 billion
John Paulson, Paulson & Company — $2.3 billion
Steve Cohen, SAC Capital Advisors — $1.4 billion

Well if it's that easy, why doesn't Good Old Barry do it?

So why would Obama ask Congress to change what he could change himself? Perhaps because Congress is a great place to send things you never want to happen. Congress is where bills that make the one-percent of the One Percent unhappy ... go to die.

And why might Obama want the proposal to die? Because, as Morgensen correctly says, he really does have his eye on his legacy and his post-presidential future. Part of that future is pictured above, and legacy libraries don't come cheap. I suspect you'll see an Obama Legacy Foundation at some point, and foundation donations don't come from people with no money to donate. I'll leave you to suss out the rest.

Lot's of details and taxation expert opinion at: http://downwithtyranny.blogspot.com/2016/06/obama-could-end-hedge-fund-t...

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darkmatter's picture

Once again, many greedy people appear
No different from silkworms wrapped in cocoons.
Wealth and riches are all they love,
Never giving their minds or bodies a moment's rest.
Every year their natures deteriorate
While their vanity increases.
One morning death comes before
They can use even half their money.
Others happily receive the estate,
And the deceased's name is soon lost in darkness.
For such people there can only be great pity.

--Ryokan (1758-1831)

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Meteor Man's picture

How about "no different from cockroaches wrapped in maggots"?

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"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn

enhydra lutris's picture

and where it is not due to a court decision or new legislation, the courts will often get involved. Procedurally, it is far easier to get congress to act.

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That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

was addressing an executive order, not a new regulation.

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dfarrah

enhydra lutris's picture

the legislative intent" With a new law, an EO can direct an agency how to implement anything vague, unclear or uncertain. If Congress doesn't like it, then can legislate to that effect. Those subject to the law can challenge it in court.

With an old law and or reg, the courts aren't too likely to look favorably on changing the effective substance of the law by EO. The argument is that if Congress felt that the existing law and regs did not reflect its intent it would change them. It has had over 50 years in which to do so. Anything that has stood unchallenged by Congress and/or the courts for that long is presumptively already carrying out legislative intent, and an EO to make a radical change wouold therefore be presumed to fail the "Legislative intent" test.

Caveat, IANAL.

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That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

Meteor Man's picture

But doesn’t changing the carried interest loophole require an act of Congress? Not according to an array of tax experts. Just as Mr. Obama’s Treasury Department recently changed the rules to curb corporate inversions, in which companies shift their official headquarters to another country to lower their tax bills, the Treasury secretary, Jacob J. Lew, and his colleagues could jettison the carried interest loophole.

Expert opinions claim the change would be routine:

“This is something President Obama can do and should do,” Mr. Wilensky said in an interview. “This is not an impossible thing to get done.”

Now a lawyer in Minneapolis, Mr. Wilensky recently wrote an article on this topic for Tax Notes, the definitive publication on national and global tax issues.

Victor Fleischer, a law professor at the University of San Diego, is another who has recommended that the Treasury get rid of the unjust tax treatment on carried interest. Mr. Fleischer, a contributor to The New York Times, has also estimated how much money such a change would bring to the Treasury.

“It’s something that Obama could accomplish and, to be honest, I’m not entirely sure why the Treasury hasn’t taken an interest in it,” Mr. Fleischer said in an interview. “In fact, there is quite a bit of revenue at stake. And doing this on carried interest would cement Obama’s legacy in substance as well as symbolically.”

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"They'll say we're disturbing the peace, but there is no peace. What really bothers them is that we are disturbing the war." Howard Zinn

...to remove weed from the schedule of controlled substances either, I believe...

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