If the Top 25 Hedge Fund Managers Paid Taxes Like You and Me, We'd Cut 44 Billion of the National Deficit
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If you took away this tax loophole for hedge fund managers, you could actually increase Social Security benefits by more than $1,000 per year for every baby boomer. In 2010 dollars, that comes to an average benefit increase of nearly 10 percent.
And that's just from 25 people.
But wait, the Republicans will say. That would kill jobs, they'll say. These people are "job creators" and "wealth creators," they'll say. No, they're not. More often than not, in fact, they're job destroyers. They make their money by betting for or against certain events -- literally "hedging their bets" -- and on more than one occasion they've been accused of creating the negative event they're betting against. Even if they don't do anything unscrupulous, these negative bets make it harder for certain ventures to succeed.
Here's a simple answer to those Republicans: If these tax cuts create jobs, where are the jobs?
In many cases these hedge fund managers owe their wealth to us, the taxpayers who play by the rules, and not to their own business acumen. This account in the New York Times, for example, describes how one of them made billions by betting that the government would rescue banks from their own lousy judgment and bad investments. Now the Republicans are willing to shut down the entire government to protect these 25 people and a few thousand others just like them.
Yesterday we discussed the fact that most Republican voters want to raise taxes on the rich to affect the deficit, and that Democrats have been slow to push this issue. We encouraged you to express your support for this "shared" approach to reducing the deficit. That needs to happen as part of any deficit deal.
So does the closing of this "billionaire's loophole." If the loophole was closed and the Bush tax cuts for the wealthy were finally ended, in fact, we could cut the defict by another $8.8 billion over the next ten years -- just from these 25 people.
So don't buy the fraud. Encourage your representatives to sign on to the "shared" approach. And imagine: If we can get 25 people to pay their fair share, we can ask everyone else who's profited from our recent miseries to pay their fair share. That's how we can restore the American Dream - one billionaire at a time.
 Technical comments: My estimates are based on the assumption that this year's earnings for the top 25 hedge fund managers will hold steady for the next ten years. Their 2010 income was down significantly from previous record highs, but as the portfolios say: Past performance is not a guarantee of future results.
I have also assumed, based on previously disclosed information, that most of the money earned by these hedge fund managers falls under the "carried interest" loophole rather than as straight management fees.