Friday, July 06, 2007


Latest Politico Column

How's this for an interesting coincidence?

Yesterday morning The Politico posted my latest column, which explored the hard choice that a small arcane tax bill moving in the House will soon force John Edwards and his leading Democratic presidential rivals to make between the two Americas they have to straddle (i.e. big money donors and progressive primary voters).

I argued that the neopopulist Edwards (who doubles as a paid hedge fund advisor) had both the most to lose and the most to gain on this issue, in large part because his credibility as a crusader for the little guy has taken a beating for the last several weeks. And that as such, he would be wise to get out front of the House bill -- which would close an outrageous loophole that allows the work of billionaire hedge fund managers to be taxed at a much ower rate than their cleaning ladies -- and challenge Clinton and Obama to take the same strong stand for basic fairness.

Well, later in the afternoon, I got an email from a reporter at Bloomberg News alerting me to a story that had moved on their wire that day reporting that Edwards had "embraced the idea" of raising taxes on the managers of private-equity firms and hedge funds. The story went on:
Edwards, who has made economic fairness a central issue of his campaign for the Democratic nomination, said he would announce within 10 days his position on a House bill that would force fund managers to pay taxes as high as 35 percent on their share of profits instead of the 15 percent capital-gains rate most pay now.

``It's not a big secret that I believe there's some unfairness in the tax code, and I think some of that unfairness applies to hedge funds and hedge-fund managers,'' Edwards, a former senator from North Carolina, said in an interview with Bloomberg Television's ``Political Capital with Al Hunt,'' scheduled to air today.
I am in NO way claiming credit for this -- in fact, I know from friends within the Edwards campaign that they were already moving in this direction several days ago, as Edwards himself hinted at in last Thursday's debate at Howard. It's just one of those little quirks of timing that catches your eye.

The real important thing to note is that Edwards is showing leadership here where his opponents are not, and he deserves credit for doing so.

"will soon force John Edwards and his leading Democratic presidential rivals to make between the two Americas they have to straddle (i.e. big money donors and progressive primary voters)."

Dan you act like those two groups are mutually exclusive:-) One of the great fallacies in American politics is that the megamillionaires and billionaires are Republicans. In fact, the majority of the ultra wealthy are Democrats. Private equity (as well as Goldman Sachs) donates more to Democrats than Republicans.

As a Republican, I find this strange and in many cases stupid unless the money is donated as a way to gain preferential treatment but it is the case.

Whether hedge funds, private equity, and the like will rethink their support in light of this bill, time will tell. Bob Novak had an article criticizing Chuck Grassly for being in favor of the bill and undercutting Republicans' arguments that Democrats were bad for private equity and hedge funds.

However, not sure how accurate that is. Many of these guys are social liberals and find every loophole known to man to avoid paying taxes so raising taxes on them may not work.

Warren Buffet, who complains about low taxes almost always finds ways to avoid them when they are raised. If he was that concerned about his taxes being too low, he could voluntarily pay money to the federal treasury.

It seems another case of, "Don't tax me, don't tax thee, tax the fellow behind the tree."
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