Both hedge funds and private equity industry had free rides during George Bush 's, when Congress was safely in Republican hands. That all changed on 06 November, when Democrats swept the Congress, and the change in control came new Democratic responsibilities to address the fiscal deficits generated during the time, Republicans controlled both the executive and legislative branches of government.
Strange to think, but the Republican Party, which is considered by many as part of fiscal responsibility has resulted in probably 80% to 90% of the nation "s accumulated national debt. However, there are still myths that Democrats are large buyers. Even today, major newspapers featured articles stating that Bush says Democrats should control spending.
Now there are only two ways to deal with expenses. The first is to spend less, but no politician likes the concept. The first rule of government is that politicians regardless of party spending money. The second way is to raise taxes in an attempt to bridge the gap between expenditures and revenues taken in. With the Democrats in power, will use the second method, which now brings us to the Hedge Funds and Private Equity.
Under the current tax code provisions, both hedge funds and private equity is given preferential tax treatment. Some income may be considered subject to ordinary tax rates on income are instead subject to the rates of 15% capital gains tax. As for the equity of this policy, the quick and dirty of it is that there is no equity or fairness. The tax code is 80,000 pages of special interests. All provisions in the tax code was written in a certain way to benefit someone or some special interest, whether 's the farmer or a hedge fund, or the restaurant industry. Everyone wield their political power at one time or another to get what they could out of the tax code.
These special interests just head to Washington DC and meet with people who control Congress, go to fancy restaurants, and try to rework the tax code for their own benefit. The last official Washington is none other than Henry Kravis, the man who made the private equity industry what it is today, through the formation of Kohlberg, Kravis, Roberts and Company (KKR). Rep. Sander M. Levin proposes more than doubling the amount of taxes Kravis now pays. Kravis is a billionaire several times, and he 's still looking to reduce their tax bill. What happened to give back. What happened to approach Andrew Carnegie 's of civic responsibility?
The staff of Rep. 's Henry Kravis asked very promptly, if the increase of taxes on private capital can adversely affect workers and other middle-class families by type of income clearly reduced yields of pension funds has on their investments. When Kravis responded "No", the meeting ended abruptly.
In other games, Stephen Schwartzman, who founded the Blackstone Group and David Rubenstein, cofounder of the Carlyle Group have met with other regulators in an attempt to stem the tide. Lobbyists are being installed in a hurry, and the money poured into them by the private equity and hedge funds, which until recently were asleep at the switch. They did not realize how far Washington has had them in the sights of your gun. For more information on this topic, please visit our website.
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