Tuesday, September 1, 2015

Donald Trump on Hedge Fund Whiners

Boch mansion

Donald Trump was speaking at Ernie Boch Jr's mansion in Norwood, Massachusetts (August 28, 2015) when he said he wants to raise taxes on hedge fund managers because they don't pay their fair share of taxes. (And he's right.)

The federal income tax on capital gains and deferred interest is only 23.8% for hedge fund mangers, CEOs (with stock options), investors (stocks, gold, real estate, fine art, etc.) and Warren Buffett — while the top marginal tax rate on regular hourly wages and salaries is 39.6% for people like Warren Buffett's secretary and doctors.

Trump says the hedge fund managers support Jeb Bush and Hillary Clinton (rather then him) because he (Trump) doesn't take their money. And most average voters (of all political persuasions) can probably appreciate what most people already know to be the truth — and that Trump has been boldly and publicly stating — that our elected politicians (on both sides of the aisle) have been doing the bidding of their biggest campaign donors, and not what the voters had bargained for. That also explains why so many of our elected officials go to work as corporate lobbyists after leaving office.

New York Times:

"In recent weeks, Mr. Trump has threatened to impose tariffs on American companies that put their factories in other countries. He has suggested he would increase taxes on the compensation of hedge fund managers. And he has vowed to change laws that allow American companies to benefit from cheaper tax rates by using mergers to base their operations outside the United States. Alarmed that those ideas might catch on with some of Mr. Trump’s Republican rivals ... a team of economists will scrutinize his proposals and calculate the economic impact if he is elected."

David McIntosh, the president of the Club for Growth, an anti-tax group that Republican candidates routinely court, said all of those are anti-growth policies. If those are the policies he implements, they’ll drive the economy into the ground and we’ll see huge drops in G.D.P. and it would lead to massive loss of jobs. [The American people have been subjected to that pro-corporate propaganda for decades.]

[My post: Growth — What is good for? Absolutely Nothin' --- Most of all growth went to the very top over the past 35 years, leaving workers with stagnant or declining wages.]

Trump boasts that he cannot be bought by bankers or corporate lobbyists. “I don’t want any strings attached,” Mr. Trump often says in his speeches, pointing to the big donations he has declined to take from lobbyists.

Mr. Trump has also threatened to make companies like Ford “pay a price” for shifting their production abroad. And while he claims to be friendly with many of them, he has called hedge fund managers “paper pushers” who tend to get lucky on the road to riches. The populist tone is playing well with a subset of the Republican electorate that is frustrated with the status quo, but there are signs that Mr. Trump is beginning to alienate some in the party’s base [a.k.a. the GOP Political Machine --- just like those in the Democratic Political Machine.]

Corporate "tax inversion" is another issue which Mr. Trump mentioned, a practice where companies acquire smaller overseas firms and move their headquarters to countries with lower taxes [like Burger King recently did.] This corporate tax dodging has cost the United States billions of dollars in lost revenue. In an interview with Time magazine, Mr. Trump called for a crackdown on these [in my words] "anti-American, unpatriotic and greedy tax-dodging corporate strategies".

Anthony Scaramucci, a managing partner of SkyBridge Capital [a hedge fund], took to Twitter over the weekend to say that Mr. Trump was “misinformed” — and that he and most of his colleagues pay the highest marginal tax rate. [Which is a total fu*king lie! These hedge fund whiners, no matter how much they rake in and how little they pay in taxes will always bitch and complain.]

Trump shot to the top of the GOP field by rallying voters against illegal immigrants and jobs being offshored to China, whom he blames for lost jobs and stagnant wages in America. Trump has proposed levying tariffs on imported goods, deporting "bad" illegal immigrants (such as those who commit felonies while here) and reducing the number of legal immigrants allowed in each year. In a further blow against conservative orthodoxy, he has said in recent interviews that he favors higher taxes on the rich and on investment income.

Stephen Moore (of the Wall Street Journal and the conservative think tank the Heritage Foundation) is running scared: “What Trump is saying about trade and immigration is a political and economic disaster. That’s destroying a lot of the progress we’ve made as a party in the last 30 years.”

GOP propagandists such as Moore are worried that Republicans like Trump are helping to debunk the long-standing GOP myth of "trickle-down economics" when a rising tide is supposed to lift all boats.

The Washington Post:

Many Republican candidates beyond Trump have voiced opposition to new free-trade deals, including the proposed Trans-Pacific Partnership being negotiated by the Obama administration with several Asian countries. While every GOP candidate promises to secure the nation’s southern border and crack down on illegal immigration, some are now expressing an openness to reducing levels of legal immigration.

Free-market economists have long argued that trade and immigration are critical to growing the U.S. economy. Top Republicans have frequently adopted those beliefs.

But a growing portion of the conservative base -- and, to a lesser extent, the country as a whole -- now blames American workers’ economic woes on competition from illegal immigrants and from low-skilled foreign factory workers abroad.

In a 2014 Public Religion Research Institute survey, 57 percent of Republicans said immigrants mostly hurt the economy by driving down wages, compared with 33 percent who said they help by providing low-cost labor. The nation as a whole split evenly on the question.

This year, the Pew Research Center found Republicans were evenly split on whether trade agreements helped or hurt their families ... Majorities of Republicans -- and pluralities of all Americans -- said trade deals lowered American workers’ wages and led to job losses in the United States.

Appealing to those sentiments is one way for GOP candidates to deliver on a promise they’ve been collectively making since the start of the campaign: to offer relief to American workers who have not only struggled through the Great Recession and its aftermath, but have seen their incomes stagnate over the past quarter-century.

That appeal is one that many conservatives, increasingly angry at GOP leadership, have embraced, and that they believe is a political and economic winner.

But anti-worker/pro-corporate GOP propagandists oppose Trump’s trade and immigration proposals, which they say would dampen economic growth. They also oppose any moves to raise top income tax rates or taxes on capital gains (stocks, real estate, gold, fine art, etc.)

Business lobbyists want GOP candidates to talk more about rolling back regulations, lowering tax rates, forging new trade agreements and allowing more H-1B workers in to pay them less than domestic American worker, depressing the wage market.

The Republicans don't want an economy that floats all boats, but only floats the biggest yachts. But if their base is listening to Trump now, maybe they too have started to wise up against the 35-year-old myth of "trickle-down economics" — screwing average workers to mostly benefit the ultra-rich.

But then again, we also have the Democratic Party Machine who also passed fast-track for the TPP trade agreement. So BOTH parties have been screwing American workers for years, and might help explain both Trump's and Senator Bernie Sanders big surges in the polls. But you can bet that the establishment political party machines (the R's and the D's) will do everything they can to maintain the current status quo — and keep either candidate from becoming our next president.

So in the end, the hedge-fund whiners will probably have very little to worry about — even if Hillary Clinton became president. Her tax plan ("gimmick") calls for raising the tax rate on short-term capital gains from 23.8% to 39.6% --- BUT --- the Clinton rate would go on a sliding scale, with the capital gains rate reduced to 23.8 percent over five years. After six years of holding a property before selling, taxpayers would pay what is today (23.8 percent). So it would just mean that investors would have to hold on to assets (stock, real estate, gold, fine art, etc.) 5 years longer before realizing the gain to pay the same low rate they pay now after only one year.

Clinton's tax gimmick


  1. Trump talks a good game but I don't believe a word he says. He's a serial liar and has no problem stretching the truth. Trump the president would be a different animal.

  2. Financial Times: Vowing to reform the tax law, Mr Trump said on Sunday that he would target hedge fund managers. “They are energetic. They are very smart. But a lot of them — they are paper-pushers. They make a fortune. They pay no tax. It’s ridiculous, OK?” he told CBS television.

    “The hedge fund guys didn’t build this country. These are guys that shift paper around and they get lucky.”

    Mr Trump said he would not be deterred by his relationships with hedge fund managers. “Some of them are friends of mine, some of them I couldn’t care less about,” he said. “It’s the wrong thing. These guys are getting away with murder. I want to lower the rates for the middle class.”

    The Managed Funds Association, a trade group for hedge funds in Washington, declined to comment.