talking point | the blog at LeeHudsonTeslik.com

Robert Reich, Bill Clinton’s labor secretary, blogged this week for the Economist. In this post, he looks at why Democrats don’t create more of a stink about private equity tax rates:

You might think that Democrats would do something about the anomaly in the tax code that treats the earnings of private-equity and hedge-fund managers as capital gains rather than ordinary income, and thereby taxes them at 15%—lower than the tax rate faced by many middle-class Americans. But Senate Democrats recently backed off a proposal to do just that. Why? It turns out that Dems are getting more campaign contributions these days from hedge-fund and private-equity partners than Republicans are getting. They don’t want to bite the hands that feed.