Wow, you really do learn something new every day.
I really, really hate the “carried interest” loophole that lets the ordinary income of hedge fund and private equity guys get taxed at the lower rate for capital gains. Right now the top rate for ordinary income is 39%, and only 20% for capital gains, so we’re talking real money. The top 25 hedge fund managers made more than $24 billion in 2013.
I always thought that Congress gaveth that loophole and Congress would have to taketh it away.
But nooooo! As David Lebedoff writes at Slate*, the IRS issued a ruling in 1993, before hedge funds existed, that was intended to apply to real estate investments. Congress never voted on it. When hedge funds arrived on the scene, the IRS applied this ruling to them. But President Obama could — right now, today, before his bedtime in Europe! — tell the IRS to stop doing that.
Looking for a real IRS scandal? This is it.
* “Why Doesn’t Obama End the Hedge Fund Tax Break?”