Pay teachers, not hedge-fund managers
TEXT OF COMMENTARY
Tess Vigeland: We heard a moment ago about the latest items up for debate in the financial reform bill. It’ll be a while before we see a final product.
But commentator Robert Reich already found something he likes.
Robert Reich: Amid all the sound and fury over financial reform is a little-noticed measure that would close a tax loophole. That loophole now allows hedge fund and private equity managers to treat their earnings as capital gains — and pay a rate of only 15 percent on them rather than the 35 percent applied to ordinary income.
The House has tried three times to close the loophole, only to have it die in the Senate because of — well, to be blunt — campaign donations from the financiers who benefit from it.
But this time may be different, because of the public’s outrage at Wall Street. And because the revenues raised by closing the loophole, some $20 billion, would help pay for extensions of popular tax cuts, such as the college tax credit that reduces college costs for tens of thousands of poor and middle-class families.
It’s not as if these fund managers perform a public service worth a $20 billion subsidy. In fact, last time I looked, many hedge fund managers were speculating in ways that destabilized the entire financial system. Nor are hedge fund and private equity managers especially deserving, as compared to poor and middle-class families. Last year, the 25 most successful hedge fund managers earned a billion dollars each. One of them earned $4 billion.
It seems to me a major goal of financial reform should be to end practices that bestow absurdly outsized rewards on a relatively few people who make bets in the casino called the capital market. Instead, Congress is coming up with a set of technical fixes for how the Street should conduct its business.
Meanwhile, the nation is cutting back on funding child care, and public schools and universities. Call me old fashioned, but I just think it’s wrong that a single hedge fund manager earns a billion dollars, when a billion dollars would pay the salaries of about 20,000 teachers.
Vigeland: Robert Reich is a professor of public policy at the University of California, Berkeley. Take a second to send us your thoughts.
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