Dean Baker: Bonanza for the Super-Rich: The Fund Managers' Tax Break

The reason most of us have seen little gain from economic growth over the last three decades is that the rich have rigged the rules to ensure that money flows upward. Through their control of trade policy, Federal Reserve Board policy, and other key levers of government, they have structured the market to weaken the bargaining power of ordinary workers and benefit the CEOs and Wall Street crew. As a result, the typical worker has seen almost none of the gains from economic growth over the last four decades.

Most of this rigging comes in before-tax income. The big gains to the rich have not been primarily because they have become better at avoiding taxes than they were four decades ago, but there are some notable exceptions. At the top of this list is the fund managers' tax break (a.k.a. the carried interest tax deduction). As tens of millions of people prepare to file their tax returns this week, it is a good opportunity to celebrate this tax deduction which gives billions of dollars every year to some of the richest people in the country for no reason whatsoever.