While making a statement during her presidential campaign, Hillary Rodham Clinton has urged lawmakers to amend the private equity tax rate by increasing the carried interest tax rate. According to her, it would be a sheer injustice when an investment manager who is earning $50 million is required to pay less tax compared to a teacher who is earning $50,000.
Clinton said that it was necessary to reform the current taxation code which is benefiting the multi-millionaire Wall Street financiers and managers, whose carried interest is not being duly recognized. This is because of the many hedge fund and private equity managers who are earning millions of dollars annually and are being taxed at a lower interest rate since their regular income is being treated as capital gains.
Eric Schultz, who is the Edwards spokesman, was ecstatic with Senator Clinton joining hands on the issue. He was hopeful that the efforts of the campaign would be recognized by others also. Senator Barack Obama feels that there is a need to close the loopholes in the taxation code.
These statements hold prime importance as a legislation is being considered in the Senate and House of Representatives for increasing tax rates on private equity firms and hedge funds. As per the existing law, fund managers are required to pay 15 percent capital gains tax on carried interest.
According to Clinton, the tax rate should be hiked to 35 percent from the existing 15 percent as this would prevent any unfair benefits being availed by some of the best paid people in the industry.
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