The time has come to tax the titans
I've already told you the story of Mrs. Campbell, my well-meaning high school guidance counselor. In case you missed it, I'll tell you again.
High school seniors in Detroit, where I grew up, had career counseling before they were turned loose on society. You took "aptitude" tests ("Would you prefer arranging flowers or building a bridge?") and read boring brochures in the name of finding out what you wanted to be when you grew up. I took the tests and read the brochures. When I went to see Mrs. Campbell for advice, she had my records spread out in front of her.
"I think you can be just about anything you want to be," she said. That was counselor-speak for: "You don't have any identifiable talent."
She reviewed the traditional professions -- medicine, law, engineering, dentistry. She started on trades -- machinist, carpenter, plumber, mechanic -- but they seemed even more problematic.
Finally, she gathered my records into a neat pile, handed them to me and said "I'm sure you'll think of something."
That's how I wound up in journalism.
If only she'd mentioned the job I've since realized would have been a perfect fit for me -- hedge fund manager.
I say this based on what hedge fund managers get paid.
David Tepper of Appaloosa, the New York Times reports, made $2.2 billion last year. That's what I said, folks -- two billion bucks. $2,200,000,000. Poor Ray Dalio of Bridgewater trailed him by a half billion and cried all the way to his tax shelter.
Pay for the top 25 earners in the hedge fund business amounted to $14.14 billion last year. That may sound just swell, as we used to say back in high school, but it was the lowest level recorded in the past four years.
That's my kind of racket. If I made that kind of money, I'd hire Mitt Romney to cut my lawn.
Wait, you say. Those guys made all that money because they're smart. They must know things the rest of us don't.
Actually, they're not so smart. Most hedge funds -- and don't ask me what a hedge fund is, for if I knew I'd manage one -- didn't outperform the market last year. That means you could have done better putting your own cash into an index fund.
Returns for Dalio's fund fell short of market yields, as did those for Steven A. Cohen's SAC Capital Advisors. Both titans still made out as if they'd outsmarted the markets. Cohen took home $1.4 billion.
What do you call it when you get paid a lot when you're successful and get richly rewarded when you fail? Capitalism.
I'm OK with that. I say let them make as much money as their greed requires -- then tax the hell out of them to get a little back for society.
The 60 percent of us who belong to the middle class are shelling out 22 percent to 30 percent of our income to various governments when we pay taxes. I'll guarantee you that none of these guys pay anything near that.
Take the payroll tax, for example. The bottom 80 percent of earners pay 7.65 percent of their income in FICA taxes. But the hedge fund managers listed above don't pay standard payroll taxes on any of their income over the first measly $113,000 in income officially designated as wages. And a perk known as the "carried interest" provision ensures that most of their income from doing whatever it is that they do is taxed at the capital gains rate -- which is about half the rate applied to the income of other professions.
These are the people our Republicans in Congress are shielding from tax increases while seeking to cut Social Security, Medicare, and Medicaid. And yes, Congress did agree on a new 3.8 percent tax on investment income as part of the Affordable Care Act. But no, it's not likely to increase the tax burden on gazillionaires.
Is this a great country or what?
Mrs. Campbell, you were my guidance counselor. You shoulda guided me a little better. I coulda been somebody; I coulda been a contender.
I coulda been a hedge fund manager.
Other Words columnist Donald Kaul
lives in Ann Arbor, Mich.