The highest paid hedge fund managers and public equity managers are taxed at 15% which is much lower than virtually all other public income tax rates, because of the U.S.’ income tax code, specifically the “carried interest” provision which states that the income of a hedge fund and/or public equity manager is subject to the tax rate of capital gains, even though unlike normal capital gains, hedge fund managers and public equity managers are not required to risk their own financial capital, as they use the capital of their clients. This law is within U.S. income tax legislation because of the incredible lobbying effort of the private sector financial industry. Since 2006, every democratic president, including Barrack Obama, has strived to close the carried interest legislative loophole. The bill designed to strike down this provision passed the House twice, but consistently falls short of being passed as a bill into law due to pressure from the financial industry, a powerful collective who help raise record amounts of financial capital for the campaigns of members of U.S. politicians
