By Amanda Litvinov
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To say that hedge fund managers are wrecking our schools and pose a threat to our very democracy might sound extreme. But take one look at how they make and protect their billions and it’s hard not to see hedge fund managers as cackling Monopoly men who light their cigars with dollar bills (and take candy from babies as they laugh all the way to the bank).
Hedge fund managers are permitted to operate in a shadowy world that is short on regulations and filled with loopholes that benefit them. That’s by design: Hedge funds use their billions to buy political influence and dodge taxes, taking money right out of our schools.
Through a set of carefully constructed tax loopholes, hedge fund billionaires pay taxes at a lower rate than the average teacher, truck driver, or police officer—and most middle-class workers.
One of the most egregious examples is the carried interest loophole, which allows hedge fund managers to structure their income to receive unwarranted and hugely significant tax breaks.
Closing the carried interest loophole alone would raise $613 billion over a decade, estimates Citizens for Tax Justice. That’s money that the federal government badly needs in order to provide the supports that our students deserve.
Insufficient education funding typically has the greatest negative impact on schools in poor neighborhoods with the most vulnerable students, including those with disabilities and English language learners.
As hedge fund millionaires protect their tax loopholes, students from low-income families sit in crowded classrooms in under resourced schools, awaiting services that may never be available to them. They are the first to lose arts and sports programs, as well as staffed libraries and counseling services.
It does not have to be this way.
The Hedge Clippers, a pro-democracy activist group that is working to shine light on the shadowy world in which hedge fund managers operate, says it’s time for our elected leaders to stand up for everyday Americans—including our educators and students—by closing the carried interest loophole.
Congress can and should close the loophole in the law, but it could also be closed by the President through executive order. State and local lawmakers can also take immediate steps to close the carried interest loopholes in their laws whether or not anyone acts at the federal level.
There’s a campaign to get New York legislators to do just that. If they don’t, the state will continue to lose $3.7 billion per year that could be dedicated to school funding, anti-poverty programs and rebuilding infrastructure—all of which voters broadly support.