Ben Stein Rips Hedge, PE Tax Law

Date: Tuesday, July 31, 2007
Author: HFN Daily Report

Ben Stein took issue with the hedge fund and private equity tax law.

In his New York Times column, Stein derided the hedge fund industry as a "terribly wealthy new class" who "by some alchemy of brilliant tax law" are paying a long-term capital gain rate of 15% on their compensation-despite not outperforming the market.

Stein next took aim at private equity, a business practice he described as "rip, strip and flip." The profit generated from private equity, "carried interest" is taxed at a low capital gain rate.

The tax code for each asset class should be changed to better accommodate the "what is going on in America right now," he wrote.

"We are in a war. We are apparently not winning the war," with a military so skinflint that "our fighting men and women are being shortchanged in training and equipment," Stein wrote.

"Is it fitting and morally right for the richest of the rich to be paying either very low tax or no tax at all?" Stein asked. "Do we dare send our men and women to fight for an America in which the very rich are so favored by the government that it amounts to an aristocracy?"

The mark of a great society, Stein wrote, is that its law is "approximate morality and fairness." Congress, he said, should "take notice of the mammoth inequity in taxation during wartime and make the tax on private equity and hedge funds approximate the treatment of other highly paid people."