Hillary Clinton slams private equity tax rate

By Kevin Drawbaugh

WASHINGTON (Reuters) - New York Sen. Hillary Clinton, the Democratic presidential front-runner, on Friday urged closing a tax "loophole" that she said unfairly benefits a few top Wall Street financiers.

Clinton joined other lawmakers in a push to raise the tax rate on "carried interest" gains made by senior partners in the booming private equity and hedge fund businesses.

"It offends our values as a nation when an investment manager making $50 million can pay a lower tax rate on her earned income than a teacher making $50,000 pays on her income," said Clinton in a campaign statement.

"As president I will reform our tax code to ensure that the carried interest earned by some multimillionaire Wall Street managers is recognized for what it is: ordinary income that should be taxed at ordinary income tax rates."

Two other Democratic presidential hopefuls -- John Edwards, a former senator, and Illinois Sen. Barack Obama -- have also expressed support for raising the carried interest tax.

"We're glad to see Senator Clinton has joined us. We hope the other candidates will join in our efforts to ensure hedge fund and private equity managers making hundreds of millions a year no longer pay taxes at a lower rate than their secretaries," said Edwards spokesman Eric Schultz.

Obama said in a statement, "We need to close the loophole that allows managers at some large hedge funds and private equity funds to unfairly cut their tax bills more than in half by treating regular service income as capital gains."

The candidates' remarks came as Congress is considering several bills that would sharply raise tax rates on some of the financial world's most secretive and savvy professionals.