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Hedgies Could Face Higher Income Taxes

February Hedge Funds: Best, Worst, Biggest

It’s simply unfair to expect hedge-fund managers to pay income tax like everyone else. It’s not right to use the tax code to treat one industry differently, even though it’s been done before. If managers of hedge funds and private-equity funds must pay more in tax, their $2 trillion industry will surely shrink—and that’s a bad thing. Or so many in the industry claim, anyway.

But the notion of taxing all pay as ordinary income—you know, the kind that comes from having a job—instead of giving a huge swath of it preferential capital-gains treatment, …

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