For many of us, we’ve been lucky if we’ve held on to jobs, or even got a cost of living salary increase during the recession that has been plaguing the country for the last decade. But for one highly specific job in the banking industry, the hedge fund manager, not only have paydays been increasing, it’s now five times as big as it was just ten years ago.
Via the New York Times:
Ten years ago, when the hedge fund industry was much smaller than it is today, it took 25 hedge fund managers to earn a combined annual payday of $5 billion.
Last year, it took only one.
Last year was very lucrative for some of the biggest and best-performing hedge funds’ chiefs. Wealth was so concentrated that a mere 25 people pocketed a total of $22.07 billion, according to this year’s annual ranking by AR Magazine, which tracks the hedge fund industry. At $50,000 a year, it would take the salaries of 441,400 Americans to match that sum.
But just because these executive are cashing big checks doesn’t mean that they have big tax bills. Sure, they are likely giving Uncle Sam more money than you are, but as a percentage of their income they pay nowhere near close to what you pay. Wonkroom writes:
[H]edge fund managers benefit from preferential tax treatment that middle-income Americans don’t. Due to what’s known as the carried-interest loophole, the income that hedge fund managers receive if their funds make money is treated as capital gains — rather than ordinary income — and gets taxed at the capital gains rate of 15 percent. Even though the pay is performance-based compensation (just like any other performance-based bonus made by any other worker), hedge fund managers receive a tax break on that income. This results in hedge fund managers paying less in taxes on this income than middle-class workers, who are subject to a 25 percent top marginal tax rate.
So a hedge fund manager that is making $1 billion a year is probably only bringing home $850,000,000. That makes you feel better, right?
When the Republicans say that rich people need to have their money because they pay most of the taxes, remember that this is what they are talking about — someone who makes one billion dollars only gets to keep $850,000,000 of it, and the GOP thinks that they should be able to keep many millions more. Whereas someone who makes $50,000 should be forced to lose collective bargaining rights to ask for a 2 percent raise for the following year.
Photo: http://www.gnu.org/copyleft/fdl.html, via Wikimedia Commons
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