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Nation's Uber-Rich Fight Over Taxes

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The outrageously wealthy among us might be a lot alike in their outsized bank accounts, but they don’t share much in common when it comes to their views on tax policy.

An article in Forbes explains:

“Has there ever been a time when so many Forbes 400 members have been involved in so many tax fights--on both sides? And not just in Washington, D.C., where epic battles rage over the future of the federal estate tax, income tax rates for the rich and whether the earnings of private equity and hedge fund managers should be taxed at 15% or 35%.” (Hat tip: TaxProf Blog)

Breakdown of the uber-wealthy smackdown:

Revive the Estate Tax
George Soros, Yes
Tom Golisano, No

New 9% Washington State Income Tax on Millionaires
Bill Gates Sr., Yes
Jeff Bezos, No

Raise 15% Tax on Private Equity and Hedge Fund Managers
Warren Buffet, Yes
Stephen Schwarzman, No

The debate among these billionaires, of course, takes places within the broader context of uncertainty the country now faces: will a big tax increase in the U.S. come to pass in January 2011?

It’s one reason why some market pros remain worried. John Mauldin, for one, is on the record as saying there is a 50-50 chance we slip back into recession in 2011, as he thinks the economy will soften in the latter half of the year and a large tax increase in 2011 (from the expiring Bush tax cuts) could tip us into recession, in his opinion.

For evidence, he cites research from Christina Romer – Obama’s former head of the Council of Economic Advisors – who showed that tax cuts or tax increases have as much as a 3-times multiplier effect on the economy. If you cut taxes by 1% of GDP then you get as much as a 3% boost in the economy. The reverse is true for tax increases.
POSITION:  No positions in stocks mentioned.