One way to help reduce our deficit.

To solve our government spending deficit problem, we must mostly reduce spending.  But, increasing revenues by closing unfair tax breaks for politically favored businesses or individuals is a reasonable part of the solution. We do not need to raise tax rates.  We do need to make sure that all similar types of income are taxed at the same rate.
One of the unfair tax breaks is the 15% income tax rate on “carried interest.”  Hedge fund managers not only charge a fee based on a percentage of assets under management, they also may get a bonus if they are successful in their investment results for their customers.  For example, they might get a bonus of  20% of the profits, if any, when profits are taken on an investment.  Under current law, it is called carried interest and is taxed at 15%.  In any other business, they would call it a bonus and tax it as earned income – at the full income tax rates of up to 38%.  This is one of the unfair tax breaks that needs to be ended.

 

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