Salon: Billionaires Ruin Democracy

Linda McQuaig and Neil Brooks have a new book out from Beacon Press, Billionaires' Ball: Gluttony and Hubris in an Age of Epic Inequality, and Salon was permitted to excerpt portions of the book prior to release. Give the entire thing a read, but here's a sampling of what to expect:

"He identified the fact that managers of private equity, venture capital and hedge funds were claiming a significant part of their incomes as capital gains (taxed at 15 percent), rather than treating them as regular income (taxed at 35 percent). That substantial difference in rates was magnified by the enormity of the incomes in question. A private equity manager receiving, say, $600 million as a capital gain would pay $90 million in tax. If the same income were treated as income from salary, it would be taxed at 35 percent (and also be subject to a 2.9 percent payroll tax), bringing the private equity manager’s tax bill to $227.4 million — almost $140 million more.

"The ostensible purpose of the lower capital gains rate is to compensate investors for the risk they take in investing their capital. But private equity and fund managers aren’t investing their own capital. They’re investing other people’s capital. They’re simply money managers. By claiming capital gains treatment, they are passing off regular income as capital gains, simply to save themselves taxes."

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