Tax Hike on Hedge Fund Managers

July 20, 2007 |

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We are not the only ones not happy about Washington’s desire to raise taxes on hedge funds and private equity firms.  Don Luskin of Smart Money included this sneak peek of his new piece on his blog today. As he points out, hedge fund managers are viewed as being rich — and therefore guilty of not paying enough taxes:

… I think it’s a terrible idea. We need more people to do more investing. And whenever you raise the taxes on something, you get less of it.

Why do you think all the anti-smoking people want to raise taxes on cigarettes? Why do you think all the anti-pollution people want to raise taxes on carbon emissions? Because they want less of those things.

Believe me, if we raise taxes on hedge fund managers we’ll get fewer hedge fund managers. Today, with lots of hedge fund managers trading all the time and keeping markets efficient, stocks are at all-time highs in most nations of the world, and markets are deeper, more liquid and less volatile. With fewer hedge fund managers, markets would shrink, become more volatile and more costly, and tumble from their present highs.

Well put.

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