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Tell President Obama: Close the hedge fund tax loophole

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Petition to President Obama:

"Direct the Treasury Department to use its existing authority to close the carried interest loophole that allows hedge fund managers to dodge billions in taxes."

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    Tell President Obama: Close the hedge fund tax loophole

    The top 25 hedge fund managers made more than every single kindergarten teacher in America combined last year, with many of them benefitting from a massive loophole that helps them avoid millions in taxes.1

    Wealthy investors pay hedge fund managers billions to manage their money. But managers pretend that income is actually money from selling investments – and these “capital gains” are taxed at a far lower rate. This carried interest loophole helps hedge funds dodge at least $18 billion in taxes, and possibly far more.2

    The Obama administration has the authority to close this loophole without Congress.3 Right now, as President Obama privately and publicly weighs his economic legacy, is the perfect moment to raise our voices and ask him to end this hedge fund scheme.

    Tell President Obama: Close the hedge fund tax loophole.

    Hedge fund managers are often bad at their jobs and provide little value to the real economy. Five hedge fund managers who made the top 25 earners list actually lost money for their clients last year.4 Instead of investing in productive business or employers, hedge funds often focus on stripping income out of companies, manipulating markets, investing in complicated financial products, and casino-style speculation that does little to create jobs.5 Many hedge fund managers use their riches to build political power and fund right-wing causes from school privatization to attacks on pensions, healthcare, and more.6

    Just the top 25 earners in this group sucked up $12.94 billion in 2015 alone, more than the $8.6 billion America’s kindergarten teachers earn each year.7 It’s bad enough that the hard-working people who care for our children and prepare them for the future make so much less than a handful of people moving money around. There’s no reason in the world to allow hedge fund managers a special tax break.

    President Obama is clearly pondering how future Americans will regard his economic record. He recently sat down for a lengthy New York Times interview to reflect on Republican economic sabotage, his job-growth record, and the continued stagnation of wages and skyrocketing inequality on his watch.8 We need to remind the president that it is not too late to add another blow against inequality to his resume.

    Tell President Obama: Close the hedge fund tax loophole.

    Money from buying investments low and selling high, or “capital gains,” is taxed at a lower rate than normal income. All the Treasury Department needs to do is use its existing authority to call hedge fund managers “service providers,” and issue new rules under the tax code.9 Then hedge fund managers won’t be able to pretend that the management fees they charge clients are actually capital gains. Even though the Obama administration claims it lacks the authority, numerous independent experts disagree.10 With the one percent choking off growth by hoarding massive sums of wealth, it’s long past time for President Obama to listen to the experts and act.

    Tell President Obama: Close the hedge fund tax loophole.

    Thank you for speaking out.

    1. Matthew Yglesias, “25 hedge fund managers earned more last year than every kindergarten teacher in America,” Vox.com, May 10, 2016.
    2. Gretchen Morgenson, “Ending Tax Break for Ultrawealthy May Not Take Act of Congress,” The New York Times, May 8, 2016.
    3. Ibid.
    4. Yglesias, “25 hedge fund managers earned more last year than every kindergarten teacher in America.”
    5. David Dayen, “What Good Are Hedge Funds?” The American Prospect, April 25, 2016.
    6. Hedge Clippers, “HedgeClippers.org.”
    7. Yglesias, “25 hedge fund managers earned more last year than every kindergarten teacher in America.”
    8. Morgenson, “Ending Tax Break for Ultrawealthy May Not Take Act of Congress.”
    9. Potential Executive Actions to Close Tax Loopholes,” Budget.Senate.gov, Retrieved April 6, 2015.
    10. Morgenson, “Ending Tax Break for Ultrawealthy May Not Take Act of Congress.”