Some of the wealthiest Americans are taking advantage of a tax loophole to avoid paying their fair share of federal taxes. Unless the law is fixed, partners of hedge funds, leveraged buyout firms (also known as private equity) and other partnerships may continue to pay less than half the rate of taxes that working-class Americans must pay--robbing our country of badly needed revenue.

Reps. Sander Levin (D-Mich.) and Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, introduced H.R. 2834 in June. The bill will tax as ordinary income the fees--or “carried interest”--that partners of hedge funds, leveraged buyout firms and other partnerships earn.

Please use the form to tell your member of Congress to support H.R. 2834.

Dear [ Decision Maker ] ,

I am writing to ask that you support legislation to immediately fix a loophole in our country's tax code. If not addressed, partners of hedge funds and private equity firms may continue paying taxes on their fees at a far lower tax rate than working-class Americans must pay. This robs our country of badly needed revenue.

On June 22, Reps. Sander Levin (D-Mich.) and Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, introduced H.R. 2834. This bill would tax fees of partners of hedge funds and leveraged buyout firms (also called private equity firms) as ordinary income. For this reason, I urge you to co-sponsor this legislation that would immediately require partners of these investment funds to pay ordinary income taxes, instead of paying the 15 percent capital gains rate on their fees.

At present, the tax law permits partners of leveraged buyout firms and hedge funds to pretend their fees are investment income that deserves capital gains tax treatment instead of compensation, which would be taxed at the much higher ordinary income rate.

By some estimates, the U.S. Treasury loses as much as $12.6 billion a year in these taxes. That's money that could go to fully funding the five-year cost of expanding the public health insurance program for low-income children, securing the Medicare and Social Security programs or restoring funding for public schools.

James Simons, founder of Renaissance Technologies and the highest-paid hedge fund partner, last year earned $1.7 billion, equal to the entire federal spending on maintaining the national park system. There is absolutely no justification for billionaires not paying their fair share of income taxes like the rest of us.

I urge you to sponsor the legislation that would close this tax loophole and ensure that multi-millionaire partners of leveraged buyout firms and hedge funds pay ordinary taxes on the money they earn.

Sincerely,

Campaign Launched:
August 16, 2007