Broader Issues in Taxing Hedge Fund Managers and Private Equity Partners

Publication Date: October 2007

Publisher: Tax Policy Center

Author(s): C. Eugene Steuerle

Research Area: Banking and finance

Keywords: Tax Policy; Fiscal future

Type: Report


If we're going to have a club whose members pay fairly low individual tax rates, we need to determine who deserves membership on the basis of principles. Few argue that letting hedge fund managers and private equity partners in the club furthers either progressivity or efficiency principles. The one legitimate argument for these club members' special status is simplification?continuing to treat all types of income the same among members of partnerships. Hardly convincing at all is the related argument that we shouldn't pick on this particular set of partners when plenty of others (say, individuals who manage their own portfolios) get the same low tax rates.