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Discussion Starter · #1 ·
Sorry for the length of this but I cout not cut out any of it without harming the overall content. Secret funds, low taxes and billionaires fight transparency...and much needed regulation.

US hedge fund managers defend industry before Congress• George Soros, Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson appear before House oversight committee. The Guardian
America's top hedge fund managers staunchly defended the conduct of their secretive, high-risk industry today and warned congressional lawmakers that knee-jerk regulation could push financial jobs across the Atlantic to London.

George Soros, Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson - who have an estimated combined wealth of $29bn - faced gruelling questions over their low rate of tax and their funds' minimal level of transparency.

They expressed a willingness to disclose more information about their investments to the Securities and Exchange Commission - but insisted that any such data should be highly confidential and must remain shielded from the public gaze.

Griffin, whose Chicago-based Citadel Group manages more than $20bn, told lawmakers that public transparency would be "parallel to asking Coca-Cola to disclose their secret formula to the world".

The 40-year-old tycoon added that past periods of regulatory uncertainty had undermined America's competitiveness with Britain: "It breaks my heart when I go to Canary Wharf and I look at thousands and thousands of jobs in London in the derivatives market which belong in America."

The hearing, part of an investigation into oversight of hedge funds, became tense at times when the billionaires were quizzed about their personal wealth. Elijah Cummings, a Democratic congressman, said a neighbour had accosted him to ask: "How does it feel to go before five folks who've got more money than God?"

Cummings called on the witnesses to explain why their income is often taxed as capital gains at a level of just 15% - below the rate paid by a "schoolteacher or a plumber".

John Paulson, who personally scooped more than $3bn last year when his Paulson & Co fund bet against sub-prime mortgages, said the comparison was unfair: "If one of yours constituents, whether they're a plumber or a teacher, bought a stock and held that stock for more than a year, they would pay a long-term rate of capital gains tax."

Democrats in the House of Representatives are keen to close loopholes which provide preferential tax treatment for hedge funds and private equity firms, although such efforts have so far stalled in the senate and are opposed by President Bush.

Several times, the Hungarian-born financier George Soros broke ranks with his colleagues to adopt a more accommodating line. Soros, who proposed the establishment of a not-for-profit credit rating agency to scrutinise derivatives, said he would have no objection to paying a standard rate of tax on all his income: "I agree to it - I've no problem with it."

The 78-year old, who is famed for betting against sterling on Black Wednesday in 1992, said he was open to greater oversight to ensure that banks and hedge funds do not use excessive leverage by borrowing too heavily on their assets.

Soros said the financial crisis had exposed flaws in the present regulatory approach: "The fact that Lehman Brothers was allowed to declare bankruptcy in a disorderly way really caused a genuine meltdown in the financial system - a cardiac arrest."

The hedge fund managers told Congress that their profits during a downturn were not a result of any particular magic but were merely down to hard work and detailed research which turned up evidence that US mortgages were overvalued.

Simons said credit rating agencies were the most culpable financial players in failing adequately to scrutinise mortgage-backed securities: "They allowed sows' ears to be sold as silk purses."

The committee's chairman, Henry Waxman, pointed out that more than 9,000 funds globally manage assets of over $2tn, expressing concern that large-scale failures of funds could pose "significant systemic risks" as they liquidate their assets.

The witnesses remained firmly unapologetic about the scale of their personal earnings, insisting that the hedge fund industry provides liquidity and "outside the box thinking" to the financial markets.

Falcone, who recently made millions by taking short positions in struggling banks such as HBOS and Wachovia, told the hearing that he was the youngest of nine children in a working-class town in Minnesota, with a father who never earned more than $14,000 a year.

"I take great pride in my upbringing," said Falcone. "Not everyone who runs a hedge fund was born on Fifth Avenue - that is the beauty of America."
 

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The title of your post is highly misleading. In fact it is simply wrong. The wealthy in this nation pay the vast VAST majority of income taxes.
 

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etofool cutting and pasting again. but all he reads is the headline not the content. don't be to hard on him though he will cry and pitch a fit in the corner. You know he is clouded by his liberal views he can't see anything else.
 

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Discussion Starter · #4 ·
Hedge fund managers income is taxed at the capital gains level not at the regular income tax level. Most of your income, if not all, is taxed at whatever your income level is on the tax scale.
The individual members, hedge fund managers all, pay regular income taxes on income other than that which they earn as fund managers, however, for most of them, excepting Soros. their sole income is taxed at 15%. If you pay income taxes at 15% of your income well and fine but most of us do not.
The title stands.

Billy as Brandon said in his post those on here name calling are acting like 2 yr olds. Why don't you grow up. If my cut and pastes bother you don't read them....duh. If I bother you fine, I'll lose little sleep over it.
 
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