There is a problem with this argument. Long gone are the days when the stock market was a rich-men only club. Today, many investors are middle-class men and women who are relying upon their market investments to cover the costs of retirement. Many have become quite wealthy through their own fiscal discipline and smart investments. And the younger generation, those 20 and 30-something professionals just starting their careers, hope to follow in the footsteps of middle-class investors. This is one of the reasons why the stock market has reached successive new highs over the past twenty years. In other words, a large tax increase on investment managers would hurt the middle class and young investors as much as it would the rich. In fact, it would hurt them more because they do not have the resources the rich have to pay increased fees for investing.
Senate Democrats have not yet indicated whether they will cooperate with the House or attempt to find other increased revenue streams through new taxes. They should not. The economy already is suffering and more taxes, no matter whom they are intended to affect, will create further economic stagnation. Politicians need to understand that American society is not rigidly divided into classes with no mobility among social groups. Instead, taxes directed against "the rich" often affect the middle class, which in turn hurts the working class whose employers are suffering from the increased burden. Taxes are not a zero-sum game. Such a misunderstanding is why we are having a problem with the AMT right now and why we do not need increased taxes on "the rich."