AQR Chief Decries Fiscal Cliff Debate

Jan 9 2013 | 11:02am ET

Having failed to convince his fellow Americans to not reelect President Barack Obama, AQR Capital Management chief Cliff Asness is blasting Obama's successful push for higher taxes on the wealthy.

In a column published by right-wing thinktank the American Enterprise Institute, Asness argues that the only way to pay for government entitlement programs is by significantly raising taxes on everyone, especially the middle class.

"The poor don't have the money to pay for a European-style welfare state, and the rich, rich as they are, don't have anywhere near enough," Asness writes.

What's more, he goes on, his fellow billionaires have some tricks up their sleeves even if you tried to get them to pony up.

"Soaking the rich means taxing investments. Investments are complicated and can be restructured to minimize taxes," Asness writes.

"Raising significantly more taxes from the rich also requires higher marginal tax rates—and their rates are already quite high. High marginal rates distort the economy and yield less revenue than anticipated because they increase the rewards for legal and illegal tax avoidance."

Asness frames the column as an argument for an honest debate; as he puts it, "to be in our political center today, you have to deny both these truths," namely that current tax rates can't pay for everything, and that in order to pay for everything taxes on everybody have to go up. Of course, he's not exactly hiding which side he thinks you should come down on.

"If we are to redistribute like Europe, we must tax like Europe. The middle class must pay more taxes and they must pay a larger share of the tax burden."

"The choice the country faces is simple. We can have big government and the Life of Julia (at least for a while, but that is another essay), with everyone paying through the nose and the middle-class share of taxes rising not falling, or we can return to the American tradition of limited government, with everyone paying a smaller burden to the state, with relatively limited services for, and relatively light taxes on, the middle class."


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.