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‘Fist bumps’ at hedge funds over Trump’s tax plan

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U.S. hedge fund managers began warming to President Donald Trump soon after his surprise election ignited a powerful stock market rally. Now, his dramatic tax cut plans give them even more reasons to cheer.

Trump, looking to make good on pledges for sweeping tax reform, on Wednesday unveiled plans for a cut in the tax rate to 15 percent for so-called pass-through businesses. While the proposal is being billed as a boon for small businesses from pizzerias to investment management firms, one clear winner looks to be the hedge fund set, where owners can earn hundreds of millions in income a year, tax experts, managers, and their lawyers said on Wednesday.

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“For hedge funds, this is an unmitigated benefit as their tax liabilities could drop significantly,” said Robert Willens, an independent tax consultant. “Obviously, they are quite enthusiastic and there may be a few fist bumps along the way.”

A manager whose hedge fund earns $50 million a year, for example, would be paying some $19.8 million in taxes, or 39.6 percent, under the current rules. That could drop to as little as $7.5 million if the rate were cut to 15 percent.

To be sure, Trump’s plan has a long, hard road to becoming reality, but that didn’t stop fund managers from blitzing their tax lawyers with calls about how to play it. Most attorneys advised patience, saying they would need to wait at least until early June, when a bill with more specific language might be hammered out.

“If the goal is to get people talking, then it is working,” said Jeffrey Parker, a partner at law firm EisnerAmper. “A proposal is just a proposal. The final version often differs significantly from the final draft.”

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Aside from the pass-through proposal, an open question is what kind of treatment will be given to so-called carried interest. That allows managers to pay a tax rate as low as 20 percent, a loophole that Trump has railed against in the past.

Similarly, there is no clarity on whether businesses would be required to pay “reasonable compensation” to their managers, income that could be taxed at a higher rate, experts said. Including that could help Trump appeal to his base and mollify critics who say the plan is a giveaway for millionaires.

“Who needs to worry about carried-interest going away if you have a 15 percent pass-through tax rate,” said hedge fund manager Jim Chanos, who runs Kynikos Associates. “This should really be called the ‘Put Rich Guys Back on Top Tax Act of 2017.'”

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Tax reform has been a signature goal for Trump since the campaign and his closest aides, including former Goldman Sachs president Gary Cohn who now directs the National Economic Council, are pushing to get it done this year. But in the wake of other stalled initiatives, plenty on Wall Street expect the plan to hit some roadblocks.

“So the first draft – prepared quickly just like his failed travel ban and healthcare proposal before the 100 days runs out – will be push-backed and maybe dramatically changed by the Democrats and members of his own party,” said Douglas Kass, who runs hedge fund Seabreeze Partners Management.

(Writing by Svea Herbst-Bayliss; Editing by Dan Burns and Nick Zieminski)

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Warren accuses Congress of complicity in Trump’s continued abuses

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Sen. Elizabeth Warren accused the U.S. Congress of complicity in President Donald Trump's continued abuse of power late Friday, after reports surfaced of his alleged attempts to solicit foreign meddling in the 2020 presidential election, and reiterated her demand that Democrats use their majority in the House to pursue impeachment.

Warren's tweeted statement came hours after the Wall Street Journal reported that Trump urged Ukrainian President Volodymyr Zelensky to investigate former Vice President Joe Biden's opposition to a Ukrainian prosecutor in 2016.

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Pennsylvania county socked with big special election bill after GOP lawmaker busted for child porn

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Lebanon County, Pennsylvania will need to spend tens of thousands of dollars to hold a special election following the resignation of a Republican state legislator.

On Tuesday, Pennsylvania Attorney General Josh Shapiro announced he had arrested state Sen. Michael Folmer for possession of child pornography. Folmer had allegedly uploaded a child pornography image to Tumblr.

“This defendant serves as a state Senator and was entrusted to honor and represent his community in the Pennsylvania Capitol,” Shapiro said in a statement. "Tonight, our Office arrested Mr. Folmer for possession of child pornography and charged him with Sexual Abuse of Children, Possession of Child Pornography, and Criminal Use of a Communication Facility. I will continue to say it—no one is above the law, no matter what position of power they hold."

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It’s ‘Clinton Cash’ all over again as the media blow the Trump whistleblower story

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Welcome to another edition of What Fresh Hell?, Raw Story’s roundup of news items that might have become controversies under another regime, but got buried – or were at least under-appreciated – due to the daily firehose of political pratfalls, unhinged tweet storms and other sundry embarrassments coming out of the current White House.

We would praise the reporters who revealed the content of a whistle-blower’s complaint that the Trump regime has refused to turn over to Congress as the law requires. But it appears that the outlines of the story were already known in DC political circles. Two weeks before the whistleblower story broke, The Washington Post ran an editorial noting that Donald Trump was withholding $250 million in military aid to Ukraine, and that while “some suspect Mr. Trump is once again catering to Mr. Putin, who is dedicated to undermining Ukrainian democracy and independence,… the president has a second and more venal agenda: He is attempting to force [Ukrainian president Volodymyr] Zelensky to intervene in the 2020 U.S. presidential election by launching an investigation of the leading Democratic candidate, Joe Biden." The authors added, "Mr. Trump is not just soliciting Ukraine’s help with his presidential campaign; he is using U.S. military aid the country desperately needs in an attempt to extort it.”

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