mykeystrokes.com

"Do or Do not. There is no try."

“Moneyed Elites Get Richer The Old-Fashioned Way; Stealing”: Preferential Tax Treatment For The Narcissistic Money Manipulators

With the 2016 presidential campaigns in full swing, the burdens of the working middle class have taken center stage. And believe it or not, there is bipartisan support from the frontrunners on a key issue brought up over and over again. Donnie Trump is for it. Hillary Clinton is for it. Jeb Bush is for it. Bernie Sanders is for it. Even Barack Obama is for it. And the American people are overwhelmingly for it.

The “it” that’s drawing such broad support is the idea of ending a ridiculous tax loophole that was written by and for the richest, most pampered elites on Wall Street. An obscurely titled “carried interest” tax break allows billionaire hedge-fund hucksters to have their massive incomes taxed at a much lower rate than the one retail workers, Main Street businesses, carpenters, and other modest-income people must pay.

Keep that carried interest tax loophole in mind when I tell you this number: 158,000. That’s the number of kindergarten teachers in America. Their combined income in 2013 was $8 billion. Here’s another number for you: 25. That’s the number of America’s highest-paid hedge fund operators whose combined income in 2013 was $21 billion. Yes, just 25 Wall Street greedmeisters hauled off $13 billion more in pay than was received by all of our kindergarten teachers — the people we count on to launch the education of the next generation.

Which group do you think is rewarded by law with the lowest rate of income tax? Right: the uber-rich Wall Streeters! Incredibly, Congress (in its inscrutable wisdom) gives preferential tax treatment to the narcissistic money manipulators who do practically nothing for the common good. Even flamboyant celebrity narcissist Donnie Trump sees through the gross inequality of this tax scam: “The hedge fund guys didn’t build this country,” The Donald recently barked. “These are guys that shift paper around, and they get lucky. The hedge fund guys are getting away with murder.” Indeed, while dodging through this loophole, they pay about half the tax rate that kindergarten teachers are assessed. In effect, Wall Street’s puppets in Congress let this tiny group of moneyed elites steal about $18 billion a year that they owe to the public treasury to finance the structure and workings of America itself.

This privileged treatment of pampered paper- and money shufflers over people who do constructive work in our society adds to America’s widening chasm of inequality. It’s so unfair and unpopular that even Donald, Hillary, Jeb, Bernie and others are saying that it has to go. So it’s bye-bye, loophole, right?

Ha — just kidding! Trump can mouth all he wants, but no animal hath such fury as a hedge funder whose special tax boondoggle is threatened. Trump had barely gotten the word “unfair” out of his puffy lips before the tax-loophole profiteers deployed battalions of lobbyists, PR flacks, and front-group operatives out to defend their precious carried-interest provision. One group, with the arcane name of Private Equity Growth Capital Council, rushed a dozen Gucci-clad lobbyists to Capitol Hill to “inform” lawmakers about the virtues of coddling Wall Street elites with tax favors.

Of course, “informing” meant flashing their checkbooks at key members of Congress. After all, even the loudest blast of political talk is cheap — and it’s the silent sound of a pen writing out a campaign check that makes Washington World keep spinning in favor of the rich.

Sure enough, Rep. Paul Ryan (R-WI) and Sen. Orrin Hatch (R-UT) , the two lawmakers who head Congress’ tax-writing committees, quickly announced that — the will of the people aside — there would be no repeal of the hedge-fund loophole anytime soon. The inequality that is presently ripping our society apart is not the result of some incomprehensible force of nature, but the direct result of collusion between financial and political elites to rig the system for the enrichment of the few — i.e., themselves — and the impoverishment of the many. There’s a word for those elites: thieves.

 

By: Jim Hightower, The National Memo, September 30, 2015

October 1, 2015 Posted by | Carried Interest Loophole, Economic Inequality, Hedge Fund Managers, Wall Street | , , , , , , | 2 Comments

“Just Smoke And Mirrors”: Trump Soaking The Rich? Eh, Not Really

So now Donald Trump’s gone and done something serious. Bummer.

But actually, don’t sweat it, because if you look a little more closely and the tax plan he unveiled Monday, you’ll see it isn’t very serious at all: one more piece of evidence that to Republicans, when it comes to tax cuts, deficits truly don’t matter. He’d reduce the top marginal rate to 25 percent on dollars earned above $300,000 (for a married filer); it’s now 39.6 percent on dollars earned above $450,000. And he’d dramatically increase the number of people who pay no tax at all (but I thought Republicans were angry at these people and wanted them to pay more!).

The nonpartisan tax experts haven’t run the numbers yet, but they will soon, assuming there’s even enough detail in the proposal for them to try, and I expect that when they do, we’ll see what we always see with GOP tax proposals—it won’t add up, because they never do. And when confronted with these numbers, Trump, like Mitt Romney and George W. Bush and a parade of Republican candidates before him, will say these geeky little experts don’t know what they’re talking about because he’ll unleash the growth that’s been suffocated for the last eight years and the federal coffers won’t even be able to hold all the revenue that will roll in and life will be a dream.

Yada yada yada. But there is something interesting about Trump’s proposal: He wants to eliminate the carried interest provision that gives the hedge-fund guys a much lower tax rate than the rest of us. Right now, they often earn many millions every year and supposedly pay a rate of around 24 percent.

Jeb Bush is for doing this too. So that’s two major GOP candidates (we still calling Bush major?) who are for a tax increase. And not just any old tax increase. One that would soak the rich! Isn’t this awesome?

Actually, no. Well wait. Yeah, I mean, ever since Warren Buffet put it so starkly a few years ago by saying how ridiculous it is that he pays a lower tax rate than his secretary, sure, fixing this has been a matter of basic decency. The loophole is an absurd scam. It would be great to close it on principle.

But the problem is that it would make almost no difference to the United States Treasury. According to the Tax Foundation, closing the loophole for hedge-fund managers and private-equity partners, the two groups who take advantage of it now, would bring in a paltry $1.3 billion a year in revenue. By comparison, the estate tax that Trump and Bush both promise to eliminate brings in around $24 billion a year.

And in fact, Trump’s loophole fix wouldn’t bring in even $1.3 billion, because there’s a key difference between his proposal and Bush’s. As noted above, the lower rate is paid by two groups, hedge-fund managers and private-equity partners. Trump would have the new, higher rate apply only to hedge-funders, not PE people. Bush’s would make people in both categories pony up. Trump hasn’t explained why, but I imagine he would say that PE people are making longer-term investments that at least (hopefully) contribute to the economy, while hedge-funders just traffic in short-term profit maximization. They’re the people he means when he says things like these guys just push paper around.

So with Trump’s plan at least, we’re talking about a few hundred million dollars a year into the treasury. Meanwhile, he cuts the top rate from 40 to 25 percent. Bush would cut the top rate to 28 percent. Both would also reduce the top capital gains tax rate by a few points, would completely eliminate the inheritance tax, and would do away with something called the Alternative Minimum Tax, which limits the extent to which high-income earners can reduce their tax bills through deductions and exemptions. There’s a lot more along these lines. In fact, Josh Barro of The New York Times wrote that Trump’s proposal would still cut the tax bills of many hedge-funders because it would not subject all their income to the 39.6 percent rate.

Okay, let’s get out of the weeds now. The point is this. Because the carried-interest loophole gets a lot of press, and because nobody likes hedge-fund guys to begin with, lots of even pretty well-informed people think that closing this loophole constitutes the wielding of a mighty sword of economic justice. It is that in principle, but in practice it’s nothing. Comparative pennies in the grand scheme of things. So Republicans like Trump and Bush can go around saying “hey, look at me, I wanna tax the rich guys!”, and the media will buy it, while in fact they’re doing the opposite.

This is why Grover Norquist of Americans for Tax Reform, the leading conservative cop on the tax-increase beat, is just fine with all this. He gets the perception. “Doing carried-interest [repeal] permits rate reduction,” Norquist told me Monday. “So I’d say that’s a fine change.”

Democrats are partly to blame for how poorly all this is understood. Barack Obama and Hillary Clinton and Bernie Sanders and (almost) all of them thunder about the Buffett Rule and the nasty hedge-funders because they’re an easy mark. But they don’t do a very good job of going on to explain that eliminating the loophole doesn’t amount to much. Well I say it’s time to start explaining.

 

By: Michael Tomasky, The Daily Beast, September 28, 2015

September 29, 2015 Posted by | Carried Interest Loophole, Donald Trump, Hedge Fund Managers | , , , , , , , | Leave a comment

   

%d bloggers like this: