Trump assails 'hedge fund guys'

Kaja Whitehouse | USA TODAY

Donald Trump wants to raise taxes on Wall Street's hedge funders, who he claims are "getting away with murder."

"The hedge fund guys didn't build this nation. These are guys who shift paper around and they get lucky," Trump told CBS' Face The Nation on Sunday. "They're paying nothing and it's ridiculous,"

Managers of hedge funds and private equity funds, which buy companies with borrowed money, tend to pay the equivalent of capital gains taxes instead of ordinary income taxes. This can result in a significant tax break since the top capital gain rate is 20%, versus a 39.6% top rate on ordinary income taxes.

Efforts to raise taxes on this class of Wall Streeters, many of whom are billionaires, gained traction following the financial crisis and concerns of growing income inequality. President Barack Obama included a line item about it in his 2008 budget blueprint. But no proposal has yet succeeded in changing the law amid protests by industry advocates that such a change could hinder entrepreneurial risk taking.

Democratic presidential hopefuls Hillary Clinton and Bernie Sanders have also cried foul over this favorable tax structure in their campaigning.

"Look, they're energetic, they're very smart," Trump told Face the Nation. "But a lot of them, they're paper pushers. They make a fortune and they pay no taxes. It's ridiculous."

On television, Trump acknowledged that he has hedge fund pals — but said it doesn't impact his views on their tax structure.

"Some of them are friends of mine. Some of them I couldn't care less about. It's the wrong thing. The hedge fund guys are getting away with murder. They're making a tremendous amount of money and they pay no taxes," Trump said.

Trump, who made his fortune off real estate, is invested in hedge funds. His single biggest holding is Blackrock Obsidian Fund, a multi-strategy fixed income hedge fund. Trump has a $25 million to $50 million stake in the fund, according to financial disclosure forms he released in July.

Trump has also said he wants billionaire hedge fund manager Carl Icahn to be his Treasury Secretary should he be elected President. Icahn practices what's known as activist investing, in which investors push companies to make changes that could boost their stock prices. The investing style has come under fire, however, amid concerns that it pushes companies to spend money too much money on investors, in the form of dividends and stock buybacks, rather than re-investing in the business.

Clinton's stance on hedge funders drew fire from hedge fund manager Leon Cooperman, who called her a hypocrite on television. Clinton's son-in-law, Marc Mezvinsk, is a co-founder of hedge fund Eaglevale Partners. And Clinton's daughter Chelsea previously worked at hedge fund Avenue Capital, run by well-known Clinton supporter Marc Lasry.

"(She) hangs out with all these people in Martha's Vineyard and in the Hamptons and then the very first thing she has to say is to criticize hedge funds," Cooperman told CNNMoney in June. "I don't need anybody crapping all over what I do for a living."

Also in June, Cooperman, the founder of Omega Advisors, told television program Wall Street Week his success should be "emulated" rather than vilified.