Taxing the rich (that means you, Hedge Fund Mgr!)

An article from Salon.com titled:

Why Democrats are afraid to raise taxes on the rich

subtitled

Could it have something to do with the recent affection of hedge-fund managers for the Democratic Party?

Having worked for a hedge fund (though only as an EA/Office Coordinator), I became exposed to this whole new world. Lots and lots of money. The article says some hedge fund managers bring home a billion dollars annually (ok that's rare but it is up there) and quote:

The 25 highest-paid hedge-fund managers are earning more than the CEOs of the largest 500 companies in the Standard and Poor's 500 combined.

Think about that for a minute. 25 > 500...

Working first for a top investment banking firm then the hedge fund, I started to learn about the very rich. How much money they make, how much money they have control over, what happens when one man (yes, almost all are men) makes one decision and how much that changes things for a LOT of other people.

The wealthiest 1 percent of Americans earn more than 21 percent of all income. That's a postwar record. The bottom 50 percent of all Americans, when all their wages are combined, earn just 12.8 percent of the nation's income.

Wow. Half of America makes only 12.8 percent of our national income. All those $18K and $35K jobs amount to a little over 10% of our nation's income. Income that is taxed to provide for our scho0ls, freeways, Social Security system, government.

That means that the wealthiest Americans, who are now taxed at a marginal rate of 35 percent, would go back to paying the 38 percent marginal rate they paid under Bill Clinton. So far, however, no Democrat has suggested that the nation should raise the marginal tax rate on the richest Americans above that 38 percent, as will probably be necessary if America is to avoid an economic meltdown in the years ahead.

This surprised me as I actually thought rich people were taxed higher than 35% or even 38% in Clinton's day. But then I remembered that bonuses are taxed higher, which is where a lot of hedge fund and i. bankers roll in the dough. I did not know that "i. banker" was a common term until I entered the GS world. I grew up with my dad starting his own small chemical and science supply company (with a peak of about 10 employees in two locations), having some hard times, then recovering and still working too hard at 59. My dad works ALL the time -on weekends, does dangerous all-nighters with chemicals which scare me - and I wish he had it easier. My mom works part-time as accountant and office coordinator. All to say, the corporate world and all the positions it contained seemed unknown and foreign to me for years. I didn't grow up with a parent who had a 9-5 job which in ways was good, no complaining. But along with my love for nonprofits, it took me longer to get over my wariness and a little fear of the big bad corporate monster. I'm really glad for my last three years in that world. I feel stronger for it.

Back to the program! And the author's solution:

What's fair? I'd say a 50 percent marginal tax rate on the very rich, meaning those earning over $500,000 per year. I'd also suggest an annual wealth tax of one-half of 1 percent on the net worth of people holding more than $5 million in total assets. Can't be done, you say? Well, the highest marginal tax rate under Republican Dwight Eisenhower was 91 percent. It dropped under John Kennedy to the 70 percent range. You say the rich will leave the country rather than face a marginal tax of 50 percent? Let them, and take away their citizenship.

I agree, tax the rich more. Kinda simple to me. But then I'm not trying to get elected and paying for my campaign with those very same rich people who are also probably my friends.