Wednesday, October 31, 2007
Here is the beginning of the article (Professor's Proposal Angers Wall Street, by Lisa Lerer):
With a shock of spiky red hair and a self-described case of stage fright, University of Illinois law professor Victor Fleischer doesn’t seem like the kind of guy to simultaneously take on Wall Street billionaires and high-profile lawmakers. But over the past year, the baby-faced professor has fallen into the adversarial role, challenging Congress to curtail some of The Street’s biggest payouts.
In 2006, the 36-year-old lawyer published a draft of his paper suggesting a tax hike for hedge fund, venture capital and private equity managers. At the time, his work made the reading lists of a handful of nerdy graduate students and professors fascinated by the inner workings of the tax code.
Today, the paper — scheduled to be published in next year’s New York University Law Review — is a must-read in Washington. As Congress feverishly debates tax policy, Fleischer has become this season’s academic It Boy.
“No one had any idea that this issue would become such a political firestorm,” Fleischer says, sitting in a restaurant near his modest Champaign, Ill., home. “It’s such an arcane issue that’s so hard to explain and understand, and now it’s something that presidential candidates have to have on their list of issues.”
Last week, Rep. Charles B. Rangel (D-N.Y.) introduced his long-awaited “mother of all tax reforms.” Included in the $1 trillion bill is the controversial tax hike on the private equity, hedge fund and venture capital industries.
The legislation would do almost exactly what Fleischer suggests: hike taxes on the “carried interest” portion of the investment manager’s income from the current 15 percent capital gains fee to the 35 percent income tax that rich Americans typically pay. A proposal in the Senate would apply the same increase to publicly traded private equity firms.